The Process of Monetary Integration in Eastern and Southern Africa PDF Download
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Author: Raphael Abel Kasonga
Publisher:
ISBN:
Category : International economic integration
Languages : en
Pages : 80
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Author: Raphael Abel Kasonga
Publisher:
ISBN:
Category : International economic integration
Languages : en
Pages : 80
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Author: Christian Sorgenfrei
Publisher: Diplomica Verlag
ISBN: 384285675X
Category : Business & Economics
Languages : en
Pages : 89
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Book Description
With the current situation in the European Monetary Union in mind, a Monetary Union in other parts of the world seems highly inadvisable. Nevertheless, Africa has some of the oldest Monetary arrangements in the world, dating back to the beginning of the 19th century. Is Africa particularly qualified for a Monetary Union? And furthermore, what features are necessary to make Monetary Arrangements between countries endurable? This study evaluates the prospects and the feasibility of a monetary union in the Southern African Development Community (SADC) from an economic point of view. Both the theory of optimum currency areas and the recent example of the European Monetary Union are employed to analyze the pros and cons of monetary unification. The theoretical implications are operationalized, first, by a broad analysis of economic and socio graphic data, and second, by estimating the degree of structural shock synchronization between SADC countries. Results obtained by an Autoregressive and Vector Autoregressive model indicate that a monetary union which includes all SADC members is neither desirable nor feasible in the foreseeable future. However, the study concludes that a small subset of countries, including South Africa, Namibia, Swaziland, Lesotho, Mozambique, Botswana and Zambia, could gain from forming a smaller monetary union.
Author: Steven Buigut
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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This paper uses VAR techniques to investigate the potential for forming monetary unions in Eastern and Southern Africa. All countries in the sample are members of various regional economic organizations. Some of the organizations have a monetary union as an immediate objective whereas others consider it as a possibility in the more distant future. Our objective is to sort out which countries are suitable candidates for a monetary union based on the synchronicity of demand and supply disturbances. Although economic shocks are not highly correlated across the entire region, we tentatively identify three sub-regional clusters of countries that may benefit from a currency union. We find some tentative evidence that some, though not all, sub-regions may benefit from a link to the Euro.
Author: Christian Sorgenfrei
Publisher: diplom.de
ISBN: 3842806868
Category : Political Science
Languages : en
Pages : 87
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Inhaltsangabe:Introduction and Course of Work: In 2007, at their meeting in Tanzania, the central bank governors of the Southern African Development Community (SADC) laid out a strategy to strengthen regional integration, containing the development of a common market by 2015, fixed exchange rates by 2016, and, ultimately, a monetary union with a single currency in 2018. In pursuit of this agenda, a free trade area absent of intra-regional tariffs was arranged in August 2008 with a regional customs union to follow this year. The currently fourteen member countries of the SADC committed themselves towards achieving economic convergence and to deepen monetary cooperation. In the 21st century, Africa finds itself increasingly separated from economic developments in the remaining world and fails to prosper from increased globalization. Despite a large abundance in natural resources, many countries have suffered from an extremely poor economic performance, which mainly originated from internal strives and weak and distortionary policies. Inward looking governments, conducting clientele policies, are focused on reaping economic rents rather than on fostering growth. Furthermore, tribal conflicts and civil war have sparked recurring border conflicts with neighboring countries. Although Africa has seen a large number of regional arrangements and trading blocs throughout the continent, the overall success for growth and trade expansion was limited. Against this background, the formation of a monetary union is believed to counteract economic and political weaknesses, to improve regional cooperation and to enhance both the political and economic standing in the world. A monetary union and a common currency entails both gains and losses for its members. On the cost side, countries in a monetary union effectively loose the ability to pursue independent monetary policies and to use the exchange rate as adjustment instrument to stabilize the economy. On the other hand, countries inside a monetary union benefit from reduced transaction costs and the elimination of internal exchange rate volatility. Furthermore, countries which suffer from weak internal stability and high inflation rates benefit by using the fixed exchange rate in a monetary union as external anchor. By transferring the power over monetary policy to a supranational central bank, the risk of homegrown inflation and currency devaluations is banished and economic agents are able to borrow at more [...]
Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: Twahibu Kambi Djabir
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Following the successful introduction of the euro in Western Europe, several regional economic blocs in Africa are planning to launch a common currency as an intermediary step towards the emergence of a single currency for the entire continent. The purpose of this dissertation is to tackle several economic issues related to monetary integration and empirically apply it to the context of the Southern Africa Development Community (SADC). In the first essay, we estimate trade potentials for southern African countries using the gravity model approach. More specifically, we use the level of infra-regional trade as predicted by the gravity model and compared it with the observed trade in order to assess the trade potentials in the region, as well as the South Africa's trade potentials with its SADC partners. Our results demonstrate that the observed trade flows among SADC countries are largely greater than the ones predicted by the empirical model. We also found that other SADC member countries over-trade with respect to South Africa. However, there are still some unexploited trade potentials for several pairs of SADC countries. The second essay deals with the issue of the choice for the optimal nominal currency anchor to which the national currencies of the region have to be pegged to. Using a panel of 63 countries, we obtained OCA indices à la Bayoumi and Eichengreen for SADC countries vis-à-vis five potential nominal anchor currencies, and we find that the optimal nominal currency anchor for these countries is the US dollar. We also find several pairs of SADC countries which are suitable for a common currency on the basis of the estimated OCA indices. In the last essay, we empirically assess the expandability of the CMA within the SADC by investigating the convergence of monetary policies of each SADC member to that of South Africa, a proxy for CMA. Empirical tests show evidence of long-run relationship between South Africa and two countries, namely Botswana and Mauritius suggesting that these countries may able to follow the leadership of the South African Reserve Bank. Following the results of the Granger-causality test, the leadership hypothesis in the strict sense is rejected for the case of Mauritius and Botswana. However, the only other country which shows evidence of following the South Africa's leadership in terms of Granger-causality is Malawi. [PUBLICATION ABSTRACT].
Author: John Stuart
Publisher:
ISBN:
Category : Africa, Southern
Languages : en
Pages : 190
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Author: Paul R. Masson
Publisher: Rowman & Littlefield
ISBN: 9780815797531
Category : Business & Economics
Languages : en
Pages : 248
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Africa is working toward the goal of creating a common currency that would serve as a symbol of African unity. The advantages of a common currency include lower transaction costs, increased stability, and greater insulation of central banks from pressures to provide monetary financing. Disadvantages relate to asymmetries among countries, especially in their terms of trade and in the degree of fiscal discipline. More disciplined countries will not want to form a union with countries whose excessive spending puts upward pressure on the central bank's monetary expansion. In T he Monetary Geography of Africa, Paul Masson and Catherine Pattillo review the history of monetary arrangements on the continent and analyze the current situation and prospects for further integration. They apply lessons from both experience and theory that lead to a number of conclusions. To begin with, West Africa faces a major problem because Nigeria has both asymmetric terms of trade—it is a large oil exporter while its potential partners are oil importers—and most important, large fiscal imbalances. Secondly, a monetary union among all eastern or southern African countries seems infeasible at this stage, since a number of countries suffer from the effects of civil conflicts and drought and are far from achieving the macroeconomic stability of South Africa. Lastly, the plan by Kenya, Tanzania, and Uganda to create a common currency seems to be generally compatible with other initiatives that could contribute to greater regional solidarity. However, economic gains would likely favor Kenya, which, unlike the other two countries, has substantial exports to its neighbors, and this may constrain the political will needed to proceed. A more promising strategy for monetary integration would be to build on existing monetary unions—the CFA franc zone in western and central Africa and the Common Monetary Area in southern Africa. Masson and Pattillo argue that the goal of a creating a s
Author: Mr.Xavier Debrun
Publisher: International Monetary Fund
ISBN: 1455201405
Category : Business & Economics
Languages : en
Pages : 70
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This paper develops a full-fledged cost-benefit analysis of monetary integration, and applies it to the currency unions actively pursued in Africa. The benefits of monetary union come from a more credible monetary policy, while the costs derive from real shock asymmetries and fiscal disparities. The model is calibrated using African data. Simulations indicate that the proposed EAC, ECOWAS, and SADC monetary unions bring about net benefits to some potential members, but modest net gains and sometimes net losses for others. Strengthening domestic macroeconomic frameworks is shown to provide some of the same improvements as monetary integration, reducing the latter’s relative attractiveness.
Author: George S. Tavlas
Publisher:
ISBN:
Category : Africa, Southern
Languages : en
Pages : 60
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