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2 edition of Is the Franc Zone an optimal currency area found in the catalog.

Is the Franc Zone an optimal currency area

D. Fielding

Is the Franc Zone an optimal currency area

by D. Fielding

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Published by University of Oxford in Oxford .
Written in English


Edition Notes

StatementD. Fielding and K. Shields.
SeriesCentre the Study of African Economies Working Paper -- WPS 2000-3
ContributionsCentre for the Study of African Economies.
The Physical Object
Pagination25p.
Number of Pages25
ID Numbers
Open LibraryOL18625436M

Is the Franc Zone an Optimal Currency Area? By David Fielding and Kalvinder K. Shields. Download PDF ( KB) Abstract. In this paper we modify the method of Blanchard and Quah () in order to estimate a\ud structural VAR model appropriate for a small open economy. In this way we identify shocks\ud to output and prices in the members of the. However, the ECCA currency (Caribbean dollar) has been linked since to the U.S. dollar (and, before that, to the British pound), and the CFA franc has been tied (except for one devaluation) to the French franc. 1. In principle, an optimal currency area could also be smaller than a country, that is, more than one currency could circulate.

making the Comoros part of the franc zone but not part of the CFA franc zone. The exchange rate of the Comorian franc to the French franc (now euro) has also since differed from that for the CFA franc. The Comoros are therefore not part of the discussions in this book. Soon after the establishment of the Eurozone it became obvious that the structural differences between member states would not abate, as expected, but rather gradually widen. Although part of the problem can be attributed to the enlargement process, it also relates to asymmetric effects of the common currency and to diverging economic policies.

1 The CFA Franc effect on trade Abstract - This paper aims to assess the effect of sharing the CFA franc on bilateral trade in the African Franc Zone (AFZ) since In the light of the endogenous theory of optimum currency, we estimate an augmented gravity model with the Poisson Pseudo Maximum Like-. The CFA franc zone is a currency union linked to the French franc. If viewed as a monetary union alone, it does not appear to be close to an optimal currency area. When viewed as part of a wider franc zone, however, its viability and its benefits become clearer.


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Is the Franc Zone an optimal currency area by D. Fielding Download PDF EPUB FB2

The Franc Zone than there is between the Franc Zone and the rest of Africa. If it turns out that there is not, then the case for an exclusively francophone monetary area is much weaker. The monetary stability of the CFA is a positive externality generated by the European Monetary.

1 IntroductionPart I: Convergence in the Franc Zone and Optimum Currency Area Theory2 Analysis of the Convergence Process in the UEMOA Zone3 The Characteristics of Macroeconomic Shocks in the Franc Zone4 Variance Decomposition of Macroeconomic Shocks in the Franc Zone and other Sub-Saharan African CountriesPart II: The Positive and Normative Analysis of Monetary and Exchange.

The results suggest that the CFA franc zone countries are structurally different from each other and thus are more likely to be subjected to asymmetric shocks. They do not appear to form an optimum currency area and the monetary union may have been a costly arrangement for the member countries unless they are compensated with some other by: The CFA Franc zones and the theory of Optimum Currency Area1 afrika spectrum 34 () 1: Francois J.

Gurtner The CFA Franc zone, which consists of two distinct areas in both central and western Africa, has been in existence for more than fifty years now.

Sharing a fully convertible. Keywords: Franc Zone, Optimal Currency Areas, Structural VAR Models * We are grateful to Kevin Lee, David Vines and seminar participants at the Centre for the Study of African. Remarkably, the exchange rate versus the French franc (the euro, now)—the anchor currency—was changed only once in 1 The purpose of this paper is to investigate the working of the monetary union in the CFA franc zone and to test whether countries in the zone form an optimum currency area (OCA) in comparison to those of the European.

David Fielding & Kalvinder Shields, "Is the Franc Zone an Optimal Currency Area?," CSAE Working Paper SeriesCentre for the Study of African Economies, University of Oxford.

Summary In this paper, we explore the features of the CFA franc zone and compare them to those of the Economic and Monetary Union (EMU) by operationalizing the criteria for an optimum currency area.

One of the most interesting developments in international finance took place with the introduction of the euro in At the time of its introduction, 11 European countries (among them, Germany, France, and Italy) gave up their national currencies to take part in a common currency area, known as the euro-zone.

As ofthere [ ]. This chapter reviews the history of the CFA Franc Zone, and discusses whether membership in the zone has supported economic growth and reduced the need for economic adjustment. It concludes that the zone is not an optimal currency area and that the costs of belonging to it outweigh its benefits.

It then assesses the alternatives to the fixed parity rate between the CFA franc and the euro. The CFA franc zone comprises a group of countries in central and west Africa whose currencies have been firmly linked to the French franc since It combines the features of a currency union with those of an exchange rate peg, and an analysis of its effectiveness must examine both dimensions.

Viewed from the perspective of a currency union among the African countries, it. Robert A. Mundell: The winner of the Nobel Prize in Economics for his research on optimum currency areas and monetary dynamics. Mundell's areas of research have included macroeconomic theory.

Is the Franc Zone an Optimal Currency Area. By David Fielding and Kalvinder Shields. Get PDF ( KB) Abstract. In this paper we modify the method of Blanchard and Quah () in order to estimate a structural VAR model appropriate for a small open economy.

In this way we identify shocks to output and prices in the members of the two monetary. The CFA franc is the common currency for the Franc Zone.

The Franc Zone, which is based on a desire to ensure greater monetary and financial stability, brings together 15 Central and West African countries, plus Comoros. The CFA franc sometimes gives rise to questions and misconceptions.

Here are answers to some of the most common questions. The Franc Zone and Optimal Currency Area Theories 1 The fixed exchange rate is a budgetary agreement between France and its former colonies, so France’s membership of the EMU has not prejudiced the system (Hadjimichael and Galy, ).

franc zone of West Africa is an optimal currency area, Fielding and Shields () used a modified method of Blanchard and Quah () to estimate a VAR appropriate for a small open economy, which is the method used in this study.

They found that there was a high degree of correlation between inflation shocks on the CFA and. The majority of the literature on the Franc Zone has the OCA literature as its starting point, yet most of the literature that seeks to explain the durability of the Franc Zone concludes that the Franc Zone is not an Optimal Currency Area (Boughton ; Hallet ; Fouda and.

the CFA Franc zone did not disintegrate and no country left it. Moreover, most papers written on the CFA Franc Zone have focused on the question of whether and how much it complied with the criteria for an optimal currency area (OCA) (see for instance Cobham.

Is the Franc Zone an optimal currency area. By D. Fielding, K. Shields and Oxford Univ. (United Kingdom). Centre for the Study of African Economies. Abstract. SIGLEAvailable from British Library Document Supply Centre-DSC(WPS/) / BLDSC - British Library Document Supply CentreGBUnited Kingdo.

Downloadable. This article examines the suitability of the currency union in the Central Franc Zone (CFA) relative to business cycles and trade.

Optimum currency area (OCA) criteria have been employed to determine the suitability of currency integration. This paper also develops a procedure for application of OCA theory to CFA and examines the criteria, taking into account the endogeneity.

optimality of setting up a common currency area by appealing to the theory of optimal currency area. In West Africa, there already exists a Francophone monetary union, namely the West African Economic and Monetary Union (WAEMU), which is a western part of the larger CFA franc zone.Introducing a Common Currency in Central Franc Zone: Is it Appropriate?

Author: Yutaka KURIHARA, Aichi University, Japan, [email protected] This article examines the suitability of the currency union in the Central Franc Zone (CFA) relative to business cycles and trade. Optimum currency area.optimal currency areas 1 introduction 5 historical background 6 2 literature review 10 objectives 10 theoretical beginnings of optimal currency area theory 11 summary of traditional oca theory 17 new oca theory 19 the monetarist critique of the phillips curve 19 credibility, time consistency and policy rules 20 the role of the exchange rate disputed