Fiscal reform and monetary union in West Africa

Hefeker, Carsten

doi:10.1002/jid.1529

Cited by 11 publications

(11 citation statements)

References 29 publications

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“…Niger, Togo and Senegal were among countries in the CFA zone that had the lowest siegniorage to GDP ratio. This result confirm the conclusions of Easterly (1999), Debrun, Masson and Pattillo, (2005) and Hefeker, (2008) that the non-CFA zone (WAMZ) relies so much on seigniorage revenue than the CFA countries. Masson and Pattillo (2001) study covering 1995 and 1998 established that seigniorage as policy handle is greater in WAMZ than the CFA.…”

Section: Literature Reviewsupporting

confidence: 89%

“…This entails forsaking expenditure switching policies Mongelli (2002). A novel from recent theoretical views on the optimality of a common currency suggests that fiscal policy distortions are serious costs to forming a monetary union Masson and Pattillo (2004), Debrun, et al (2005Debrun, et al ( , 2010, Zika (2006) and Hefeker (2008). Trade creation, financial and capital efficiency effect as well as the gains from policy coordination are the main benefits of monetary union De Grauwe, (2000), Mongelli, (2002), De Grauwe and Mongelli (2005), Kronberger, (2004) Pattillo, (DMP) (2005 and2010).…”

Section: Literature Reviewmentioning

confidence: 99%

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Estimating the Costs and Benefits of a Common Currency for the Second West African Monetary Zone (WAMZ)

Okafor¹

2013

JEBS

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This paper, estimates the costs and benefits of a common currency in WAMZ. Behavioral models capturing the elements of costs (asymmetric shocks, loss of monetary policy autonomy, and fiscal policy distortion), and benefits (trade creation, financial integration effects and policy coordination gains) were estimated using the Vector Auto-regression (VAR) procedure and panel estimation technique.VAR impulse response and forecast error method was used to determine the countries' response to shocks while panel regression technique was used to estimate other behavioral equations. Fiscal policy distortion and loss of monetary policy autonomy are the main cost of monetary union in the zone while the potential trade creation gain is marginal. High disposition to money reserve and weak revenue base are the core determinants of fiscal policy distortion in the zone. Overall, the paper concludes that fiscal policy distortion constitutes serious policy challenge to monetary union in the zone. Dealing with this challenge may require short-run systematic macroeconomic adjustments to enhance the convergence of macroeconomic policy indicators in the zone.At the initial stage, the community adopted a protocol known as the ECOWAS Monetary Co-operation Program (EMCP) in 1987. The EMCP was designed to strengthen the achievement of the common currency and common central bank framework. Nevertheless, lack of commitment, non-uniform adoption of required macroeconomic framework, and lack of policy coordination and harmonization between the CFA Franc zone and the non-CFA franc zone countries have been major obstacles to the implementation of the project.

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Section: Literature Reviewsupporting

confidence: 89%

Section: Literature Reviewmentioning

confidence: 99%

Estimating the Costs and Benefits of a Common Currency for the Second West African Monetary Zone (WAMZ)

Okafor¹

2013

JEBS

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“…It is implied that tax revenues are insufficient hence, money is created to ensure primary budget balance (Blanchard and Fischer, 1989;Easterly, 1999 andHefeker, 2008).…”

Section: Revenue Functionmentioning

confidence: 99%

“…In some countries of Sub-Sahara Africa (SSA), particularly Nigeria and other West African nations, budget deficit has grown from low single digit levels in the 1980s to unprecedented two digit levels in the 1990 and the 2000 decades (Udo, 2007;Hefeker, 2008;. Specifically, the fluctuating nature of the country's tax base and the associated inefficiencies in the administration of tax policies are among the classical culprits accounting for these macro-imbalances.…”

Section: Introductionmentioning

confidence: 99%

Modeling Fiscal-Monetary Policy Interaction in Nigeria

Okafor¹

2012

IJEF

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This paper offers an analytical description of the nature of interaction between fiscal and monetary policy in Nigeria. It seeks to model how policymakers' preferences and loss functions as well as other underlying economic fundamentals and processes influence economic policy outcomes. Using a game theoretical framework, the study reveals that misalignment of policy instruments and strategies, particularly fiscal dominance over monetary policy is the major factor responsible for the ineffectiveness of economic policies in Nigeria. However, a framework that provides for an optimal threshold that synchronizes the policy preferences of the policymakers will result into an optimal solution that could improve the interaction between fiscal and monetary policy in Nigeria.

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“…Few regional policies have, consequently, consumed as much resources and efforts of ECOWAS member states and the ECOWAS secretariat as the need to facilitate cross-border economic transactions vis-à-vis the inadequacy of the region's eight different currency regimes and payments systems. Over the past 36 years, ECOWAS has attempted but so far failed to implement various forms of regional payments systems as a stepping-stone to creating a common currency for all 15-member states (Debrun, Masson, and Patillo 2005;Hefeker 2010;Dufrénot 2011). The only successful attempt at monetary integration in West Africa is the CFA franc issued by UEMOA regional bank, the Banque centrale des e´tats de l'Afrique de l'ouest (BCEAO) in 1994 for nine Francophone countries.…”

Section: West African Private Sector Banks and Financial Sector Integmentioning

confidence: 99%

Regional Integration and the Private Authority of Banks in West Africa1

Iheduru

2012

International Studies Review

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Iheduru, Okechukwu C. (2012) Regional Integration and the Private Authority of Banks in West Africa. International Studies Review, doi: 10.1111/j.1468‐2486.2012.01112.x A lacuna in the networked global economy and private regulatory authority literatures—hence the main theoretical contribution of this article—involves situations where regulatory authority is ceded or outsourced to nonstate business actors that, in addition to their commercial mission, espouse and actually integrate their profit motive with political and economic missions that can enhance or undermine regional integration effectiveness. Such identity‐based, dual‐mission regional business actors are more likely to promote regional economic integration than their foreign counterparts because these firms often define the region as the centerpiece of their investment decisions. The melding of their “region‐centricity” with the profit motive may suggest the capacity of states and nonstate actors to “tame” or “regionalize” globalization or even challenge the existing global order. The empirical evidence is drawn from an unlikely source, that is, cross‐border, dual‐mission regional banks in West Africa to whom governments and INGOs have ceded or “outsourced” critical central banking regulatory authority, empowering or enabling them to (i) act as regional development banks through public–private partnerships; (ii) create and regulate financial instruments as surrogate common currency and regional payments systems; and (iii) cross‐border supervision of regional bank subsidiaries and branches. Expanded private authority of regional banks is creating putative region‐wide norms of financial integration and behavioral changes among banks and other sectors and governments while amplifying the limits of private‐sector‐led financial integration. The study fills a gap in the comparative regionalism literature that continues to neglect, misidentify, or undervalue the African experience.

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Fiscal reform and monetary union in West Africa

Cited by 11 publications

References 29 publications

Estimating the Costs and Benefits of a Common Currency for the Second West African Monetary Zone (WAMZ)

Estimating the Costs and Benefits of a Common Currency for the Second West African Monetary Zone (WAMZ)

Modeling Fiscal-Monetary Policy Interaction in Nigeria

Regional Integration and the Private Authority of Banks in West Africa1

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