Stylized Facts on Bilateral Trade and Currency Unions: Implications for Africa

Should African Monetary Unions Be Expanded? An Empirical Investigation of the Scope for Monetary Integration in Sub-Saharan Africa

“…Trade among WAMZ countries, at around 2 percent of their total trade in 2007, is much lower than trade among WAEMU countries, even though GDP of the former group is higher (Table 5). However, as found in some studies and as demonstrated by WAEMU, monetary unions tend to endogenously create trade (Tsangarides et al, 2006). ECOWAS countries face asymmetric terms of trade shocks, particularly since Nigeria is the only oil exporter.…”

“…Masson and Pattillo (2005) tend to confirm the somewhat surprising estimates of Rose (2000) that suggest that trade in African monetary unions is about three times greater than it would be if member countries did not share the same currency, after controlling for some of the factors that the gravity model suggests should matter-though there is continuing doubt that all relevant features of the CFA franc zone have been taken into account. Tsangarides et al (2006) estimate that a monetary union increases intra-union trade by a factor of 1.7 in Africa, controlling for the effect of a free trade agreement. Tapsoba (2009) finds that monetary integration increases trade intensity and business cycle synchronization, but less so in Africa than among industrial countries.…”

The Impact of Export Promotion Institutions on Trade: Is It the Intensive or the Extensive Margin?

“…Information on common currencies is that used by Glick and Rose (2002) and is kindly provided by Andrew Rose in his website. This information has been complemented and updated with that reported in Tsangarides et al (2006). Data on population and tourist arrivals are from the World Development Indicators, whereas the countries shares in total imports have been calculated using trade data from COMTRADE.…”

An Index of African Monetary Integration (IAMI)

“…First, arguments from the proposed AMU are supported by Guillaume and Stasavage (2000) and Tsangarides et al (2006), arguments against the proposed currency are in Bayoumi and Ostry (1997) and Karras (2007) whereas the attendant literature supporting an AMU, though with some reservations include: Yehoue (2005), Buigut (2006), Buigut and Valev (2006), Masson (2006Masson ( , 2008, Debrun et al (2011) and Tsangarides and Qureshi (2015). Second, with regard to the WAMZ, Ogunkola (2005) and Diop (2012) conclude on its feasibility, while a bulk of the attendant literature is either of the position that the currency is unfeasible (Debrun et al, 2005;Houssa, 2008;Tsangarides & Qureshi, 2006;Cham, 2009;Chuku, 2012;Alagidede et al, 2012;Asongu, 2013bDufrénot & Sugimoto, 2013;Harvey & Cushing, 2015;Asongu et al, 2019) or conditionally feasible if some criteria converge (Bénassy-Quéré & Coupet, 2005;Asongu, 2014a;Ekpoh & Udoh, 2013;Bangaké, 2008;Saka et al, 2015).…”