TITLE:
Monetary Union and Bilateral Trade among CFA Franc Zone Member Countries: An Empirical Analysis
AUTHORS:
Gnanderman Sirpe
KEYWORDS:
Regional Integration, Monetary Union, FCFA, Model of Gravity, Commercial Potentialities
JOURNAL NAME:
Modern Economy,
Vol.10 No.2,
February
13,
2019
ABSTRACT:
This paper examines the trade promoting effects of
monetary union in the context of the CFA franc zone. Using the gravity model as
a basis for predicting the volume of trade between countries, the study
attempts to estimate the potential for increased trade within the CFA franc
zone. The study shows that the CFA countries have experienced relatively low
monetary growth, relatively strict budgetary disciplines, and consistently low
inflation. However, the results of the study indicate that monetary union in
the case of the CFA franc zone did not promote economic integration among
member countries in the form of expanded trade. The actual trade among these
countries remained small despite the use of common foreign exchange policy and
free transferability of resources among these countries.