Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/269514 
Year of Publication: 
2018
Series/Report no.: 
FERDI Working Paper No. P233
Publisher: 
Fondation pour les études et recherches sur le développement international (FERDI), Clermont-Ferrand
Abstract: 
The literature on Optimal Currency Areas (OCA) has identified several channels for the ex post justification of common monetary areas based on the synchronicity criterion. These include trade, cross-border investments, mobility of factors, mobility of goods and services, and fiscal convergence of member countries. We focus on the later for the African continent. We analyze the role of African regional economic communities (RECs) in convergence of fiscal policies from 1990 to 2015. Our estimates show that African RECs reduce significantly fiscal divergence between countries. We further find that common monetary areas are more effective in fostering fiscal convergence. This result is in line with the argument of self-validation of monetary arrangements in Africa, despite low levels of cycle synchronization and trade intensity.
Subjects: 
Fiscal convergence
Common monetary areas
Africa
JEL: 
E62
F15
O55
Document Type: 
Working Paper

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