Fiscal convergence in africa: what role for regional economic communities?

• Journal: Journal of Economic Integration, 2019, 34(2), pp. 214-235.
• Publication date: June 2019
• Co-authors: Vigninou Gammadigbe (BCEAO), Daouda Sembene (CGDEV) and Ismaël Issifou (UN).

Abstract

The literature on optimal currency areas (OCA) has identified several channels for the ex-post justification of the synchronicity criterion of common monetary areas. 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 the convergence of fiscal policies from 1990 to 2015. Our estimates show that african recs significantly reduce fiscal divergence between countries. Furthermore, we 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.

WP versions:

“Convergence et divergence budgétaire en Afrique: le rôle des Communautés économiques régionales et des Unions économiques et monétaires”, FERDI Working Paper P217, March, 2018.

“Fiscal Convergence in Africa: What Role for Regional Economic Communities?”, FERDI Working Paper P233, September, 2018.

Featured in: “Convergence budgétaire en Afrique: quel rôle pour les communautés économiques régionales?”, Revue

d’économie du développement, 2018, 26(3), pp. 5-31.

Read more: https://www.e-jei.org/journal/view.php?doi=10.11130/jei.2019.34.2.214