Revisiting the theory of optimum currency areas: Is the CFA franc zone sustainable?

Cécile Couharde (), Issiaka Coulibaly, David Guerreiro and Valérie Mignon ()
Additional contact information
David Guerreiro: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique

Working Papers from HAL

Abstract: This paper aims at explaining why the CFA countries have successfully maintained a currency union for several decades, despite failing to meet many of optimum currency area criteria. We suggest that the CFA zone, while not optimal, has been at least sustainable. We test this sustainability hypothesis by relying on the Behavioral Equilibrium Exchange Rate (BEER) approach. In particular, we assess and compare the convergence process of real exchange rates towards equilibrium for the CFA zone countries and a sample of other sub-Saharan African (SSA) countries. Our findings evidence that internal and external balances have been fostered and adjustments facilitated in the CFA zone as a whole—compared to other SSA countries—as well as in each of its member countries.

Keywords: Equilibrium exchange rates; CFA zone; Optimum Currency Areas; currency union sustainability (search for similar items in EconPapers)
Date: 2012
Note: View the original document on HAL open archive server: https://hal.science/hal-04141053
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-04141053/document (application/pdf)

Related works:
Journal Article: Revisiting the theory of optimum currency areas: Is the CFA franc zone sustainable? (2013)
Working Paper: Revisiting the theory of optimum currency areas: Is the CFA franc zone sustainable? (2013)
Working Paper: Revisiting the theory of optimum currency areas: Is the CFA franc zone sustainable? (2012)
Working Paper: Revisiting the theory of optimum currency areas: Is the CFA franc zone sustainable? (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-04141053

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().