Monetary Union in West Africa: Who Might Gain, Who Might Lose, and Why?

36 Pages Posted: 14 Feb 2006

See all articles by Xavier Debrun

Xavier Debrun

International Monetary Fund (IMF) - Research Department

Paul R. Masson

International Monetary Fund (IMF) - Research Department; The Brookings Institution

Catherine A. Pattillo

International Monetary Fund (IMF) - Research Division

Multiple version iconThere are 2 versions of this paper

Date Written: December 2002

Abstract

We develop a multicountry model in which governments aim at excessive spending in order to serve the narrow interests of the group in power. This puts pressure on the monetary authorities to extract seigniorage, and thus affects the incentives countries would have to participate in a monetary union. This feature, ignored by the monetary union literature for Europe, is potentially important in Africa. We calibrate the model to data for West Africa and use it to assess proposed ECOWAS monetary unions. We conclude that monetary union with Nigeria would not be in the interests of other ECOWAS countries, unless it were accompanied by effective discipline over Nigeria`s fiscal policies.

Keywords: Monetary union, West Africa, Africa, fiscal distortions

JEL Classification: E58, E61, E62, F33

Suggested Citation

Debrun, Xavier and Masson, Paul R. and Pattillo, Catherine, Monetary Union in West Africa: Who Might Gain, Who Might Lose, and Why? (December 2002). IMF Working Paper No. 02/226, Available at SSRN: https://ssrn.com/abstract=880920

Xavier Debrun (Contact Author)

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

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Washington, DC 20431
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Paul R. Masson

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

700 19th Street NW
Washington, DC 20431
United States

The Brookings Institution ( email )

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United States
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202-797-2968 (Fax)

Catherine Pattillo

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

700 19th Street NW
Washington, DC 20431
United States

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