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Corresponding Author:
Kanfitine Lare-Lantone, University of Lomé, Togo and Sheridan College, Ontario, Canada

Coauthors:
Emmanuel Anoruo, Coppin State University, Baltimore, MD, USA

West African Monetary Union and Colonial Economic Ties

Volume 75 - Issue 3, August 2022
(pp. 323-362)
JEL classification: E31; E52; H30; F45; O42
Keywords: Colonial Ties; Regional Integration; Macroeconomic Convergence; Monetary Convergence; Monetary Union

Abstract

This paper examines the effects inherited economic and monetary colonial ties exert on the monetary unification of the Economic Community of West African States. Specifically, the study substituted in a Structural Vector Auto Regression framework domestic supply shocks with import supply price shocks from the former colonial economies (France, Portugal, and the UK), the regional economy, and the global economy to assess their effects on member countries’ monetary convergence variables. Empirical results provide evidence that convergence variables respond more symmetrically to supply price shocks from the former colonial economies and the global economy than from the regional economy. The predominance of pairs of former French colonies with symmetric responses to supply shocks can be attributed to the Communauté Financière Africaine franc effect. Besides, symmetric convergence variables’ responses by countries of different colonial heritages can be due to the proximity effect. The variables’ impulse responses to a unit of regional price shock cluster member countries with comparable paths into subgroups. However, the wide gaps between the magnitudes of their responses reveal the absence of inflation, fiscal policy, and monetary convergences. Finally, inherited colonial economic and monetary ties are not conducive to the monetary unification of the region.

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Institute for International Economics of the Genoa Chamber of Commerce

Institute for International Economics
of the Genoa Chamber of Commerce