Welfare Effects of Monetary Integration: The Common Monetary Area and Beyond

IMF Working Paper WP/12/136

33 Pages Posted: 27 Jul 2014

See all articles by Tamon Asonuma

Tamon Asonuma

International Monetary Fund Research Department

Xavier Debrun

International Monetary Fund (IMF) - Research Department

Paul R. Masson

affiliation not provided to SSRN

Date Written: March 15, 2012

Abstract

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

Asonuma, Tamon and Debrun, Xavier and Masson, Paul R., Welfare Effects of Monetary Integration: The Common Monetary Area and Beyond (March 15, 2012). IMF Working Paper WP/12/136. Available at SSRN: https://ssrn.com/abstract=2471673 or http://dx.doi.org/10.2139/ssrn.2471673

Tamon Asonuma (Contact Author)

International Monetary Fund Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Xavier Debrun

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-8321 (Phone)
202-623-6343 (Fax)

Paul R. Masson

affiliation not provided to SSRN

No Address Available

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