This paper examines the monetary transmission mechanism in the countries of the Central African Economic and Monetary Community (CAEMC). Specifically, we focus on the very first step of this mechanism namely the interest rate pass-through from short-term interest rates towards long-term rates. Using an autoregressive distributed lag (ADRL) model, we show that there is evidence of a very low and incomplete long-run pass-through from the policy rate to the deposit rate. It appears also that the lending rate exhibits a huge overshooting effect in reaction to the changes in the policy rate. When splitting our time span in two interest rate cycles, we show that there is evidence of an interest rate cycle asymmetry.

This paper analyzes the relationship between the level of financial development of a country and its comparative advantage in international trade. In fact the link between the two notions seems to perform in a two-side direction: A number of researchers have stressed the key role a country’s financial development is likely to play in its specialization in international trade, thus leading to a comparative advantage in the financially intensive goods, alongside capital and human resources. At the same time, it is argued that countries with comparative advantage in financially intensive goods experience a higher demand for external finance, and therefore financial development. In this paper, we aim to check the existence and the sense of the relation between the two variables within East Asian countries. A time-series approach using the VAR Model has been used to provide long run relationships between financial development and international trade in manufactured goods. Our main result suggests that for most of the countries considered, international trade in manufactured goods enhances financial development.

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