Welfare Effects of Monetary Integration: The Common Monetary Area and Beyond
IMF Working Paper WP/12/136
33 Pages Posted: 27 Jul 2014
Date Written: March 15, 2012
This paper proposes a quantitative assessment of the welfare effects arising from the Common Monetary Area (CMA) and an array of broader grouping among Southern African Development Community (SADC) countries. Model simulations suggest that (i) participating in the CMA benefits all members; (ii) joining the CMA individually is beneficial for all SADC members except Angola, Mauritius and Tanzania; (iii) creating a symmetric CMA-wide monetary union with a regional central bank carries some costs in terms of foregone anti-inflationary credibility; and (iv) SADC-wide symmetric monetary union continues to be beneficial for all except Mauritius, although the gains for existing CMA members are likely to be limited.
Keywords: Common Monetary Area; Monetary Union; SADC countries
JEL Classification: E58; E61; F33
Suggested Citation: Suggested Citation