Estimating the Macroeconomic Effects of Monetary Unions: The Case of Trade and Output
Author(s)
Anyanwu, John C.
Abstract
This paper examines the various theories and paradigms relating to trade and output in monetary unions. Both descriptive and empirical evidence have been used to analyse the case of African regional economic groupings, especially that of the West African Economic and Monetary Union (WAEMU) and other countries in the Economic Community of West African States (ECOWAS). While the descriptive statistics point to greater room for improvement, especially in the areas of price stability, fiscal discipline and greater intra–trade, the empirical evidence shows that monetary union is beneficial to bilateral trade and especially economic growth. The results support the hypothesis that important beneficial effects of monetary union also come through central bank credibility.
