Abstract

By virtue of their membership in the CFA zone, the ECOWAS countries that are part of WAEMU have followed a very different path from the non-WAEMU countries. After a brief overview of macroeconomic performance of the WAEMU group, this section will consider the following issues. Could a West African monetary union potentially serve as a vehicle for broader regional integration and could it promote improved domestic policies by locking in mutually agreed policy commitments through peer pressure? How well has WAEMU done in this regard? Next, to understand what the non-WAEMU countries could potentially gain or lose from giving up large areas of policy flexibility by forming a monetary union, it is useful to review how well they have used that policy flexibility. What has been the history of policy regime choices, particularly exchange rate and trade policy, in each of the non-WAEMU countries, and how have these choices affected macroeconomic performance?

By virtue of their membership in the CFA zone, the ECOWAS countries that are part of WAEMU have followed a very different path from the non-WAEMU countries. After a brief overview of macroeconomic performance of the WAEMU group, this section will consider the following issues. Could a West African monetary union potentially serve as a vehicle for broader regional integration and could it promote improved domestic policies by locking in mutually agreed policy commitments through peer pressure? How well has WAEMU done in this regard? Next, to understand what the non-WAEMU countries could potentially gain or lose from giving up large areas of policy flexibility by forming a monetary union, it is useful to review how well they have used that policy flexibility. What has been the history of policy regime choices, particularly exchange rate and trade policy, in each of the non-WAEMU countries, and how have these choices affected macroeconomic performance?

WAEMU

Aiming to build on the cooperation in the monetary sphere established though the long-standing West African Monetary Union, the member countries, Benin, Burkina Faso, Côte d’Ivoire, Mali, Niger, Senegal, and Togo, formed the West African Economic and Monetary Union (WAEMU) in January 1994.12 With the addition of Guinea-Bissau in 1997, this group has been working to foster broader economic cooperation through creation of a single market. The countries in WAEMU have a common, stable, convertible currency—the CFA franc—which has been pegged to the French franc since 1948 and to the euro since 1999. Inflation has been consistently low, although output growth has been subject to large swings.

During the 1986–93 period, the WAEMU countries suffered a severe recession, associated with a prolonged terms of trade deterioration and steep increases in labor costs, which, together with the nominal appreciation of the French franc against the U.S. dollar, led to a substantial real exchange rate overvaluation. These developments were exacerbated by mounting internal imbalances, evidenced by rapidly declining national savings rates. Exports and economic activity weakened, collapsing fiscal balances as both trade and corporate tax revenues fell with the recession. Transfers to public enterprises rose and public sector financing requirements grew, crowding out private investment. Countries began to accumulate domestic and external payment arrears and public debt grew. By 1990–93, real GDP per capita was declining on average 3 percent per year (Hernández Catá and others, 1998).

As part of the strategy to address these problems, the CFA franc was devalued from 50 CFA francs per French franc to 100 CFA francs in January 1994. Following the devaluation, exports turned around, led by increases in volumes of traditional exports. Improved profitability in the tradable sectors contributed to a strong growth performance: 5 percent real GDP growth translating into 2 percent growth in real GDP per capita during 1994–98. Following a surge in prices associated with the devaluation, inflation declined rapidly to under 4 percent by 1998. During 1994–98, output, exports, and investment increased more rapidly than in other sub—Saharan African countries.

In recent years, WAEMU countries have taken steps toward greater regional integration and coordination of macroeconomic policies by adopting convergence criteria, establishing a common external tariff, harmonizing taxes, and establishing structural funds to further a more balanced development across the union. There are, however, questions about how effectively trade liberalization and the common external tariff have been implemented. Evidence suggests that private interest groups have pushed to have many locally produced goods moved into tariff categories with the highest protection (World Bank, 2000). Non-tariff barriers such as road blocks and administrative harassment still hamper intra-zone trade.

In addition, despite substantial reforms in recent years, the depth of financial markets remains relatively low, and the WAEMU countries still face imposing structural problems in the banking and financial sectors. Although there has been some improvement in compliance with prudential norms set by the regional banking commission, there is still ample scope for further strengthening supervision of the financial system. At the root of the problem is the low level of competition, the weakness of the judiciary system’s enforcement of contracts, and the extensive government involvement and management of banks. These structural problems and a lack of creditworthy projects have contributed to excess liquidity in many WAEMU banks since the CFA franc devaluation in 1994. Ideally, the interbank market should help smooth imbalances in liquidity in different countries but, in reality, the interbank market is inefficient and not many banks participate. Given the small size of the financial markets, the development of more diversified financial instruments could occur most naturally at the regional level.13

Recognizing that a certain threshold of macroeconomic performance is a prerequisite for moving to a common market, in 1993 WAEMU countries set up five indicators to monitor progress toward macro-economic convergence. Compliance with the criteria was broadly satisfactory through end-1998 at the WAEMU level, but performance was uneven across the member countries. The system’s effectiveness was limited by the lack of sanctions, the absence of a consultation process among members, as well as by poorly designed indicators that were not the most directly relevant to the sustainability of fiscal policy. In December 1999, a new Convergence, Stability, Growth, and Solidarity Pact was adopted, which designated 2000–02 as a convergence phase and 2003 onward as a stability phase. The pact emphasizes one key criterion: the basic fiscal balance must be in equilibrium or surplus. The other primary criteria are convergence to an inflation rate of no more than 3 percent; ratios of domestic and foreign debt to GDP of less than 70 percent; and the nonaccumulation of domestic and external payment arrears.14 The pact now includes a penalty mechanism, which can include withdrawal of access to the West African Development Bank and suspension of central bank financing, initiated primarily if a country does not comply with the key deficit criterion. Currently, with the exception of Niger, Guinea-Bissau, and Togo, the countries are on track to meet these criteria by 2002 (IMF, 2000).

Other Countries in West Africa

In the 1970s and 1980s, the policy regimes of many of the non-WAEMU countries in the region were characterized by large government deficits financed by money creation, which led to high inflation (detailed descriptions of country experiences are given in Appendix I). In combination with fixed nominal exchange rates that had parities that were not adjusted, real exchange rates became increasingly overvalued. Excessive domestic credit creation also spilled over into high import demand. The countries reacted to balance of payments difficulties by tightening exchange and trade restrictions, leading to large parallel market premiums for foreign exchange. At some point, the authorities began to lose control and a vicious circle of money-financed deficits and foreign exchange controls led to increases in smuggled or misinvoiced goods, resulting in declining trade tax revenues that further worsened the deficit. The experiences of Ghana, Sierra Leone, and The Gambia are particularly well characterized by this description.

During the mid-1980s and 1990s, a central element of these countries’ economic reform programs was the liberalization of exchange and trade restrictions and the movement toward market-determined exchange rates. These reforms have met with variable success. Nigeria’s liberalization has been full of starts and stops; highly variable inflation and real exchange rate changes have been associated with terms of trade shocks and long periods of economic mismanagement. Ghana experienced success in restoring incentives for tradable production and improved growth, but losses of fiscal control and poor management of external shocks have created problems in controlling inflation. Appreciation of the real effective exchange rate from 1996 until end-1999 reduced competitiveness. The Gambia and Guinea also had successful stabilizations in the late 1980s and early 1990s that significantly lowered inflation, but were later compromised by political and associated fiscal problems and poor management of shocks. In the 1980s, Cape Verde managed good growth with relatively prudent policies, although the public sector was too large and interventionist. In the 1990s, fiscal laxity slowed progress in Cape Verde; currently, there appears less room for slip pages given the peg to the euro through the Portuguese escudo. Despite attempts at reform, Liberia and Sierra Leone have experienced poor macro-economic performance during much of the 1990s due to the economic devastation caused by civil conflicts.

Performance of WAEMU and Non-WAEMU ECOWAS Countries

The general picture emerging from a comparison of WAEMU and non-WAEMU ECOWAS countries during various subperiods is generally similar to that resulting from comparing CFA countries with the rest of sub-Saharan Africa. Essentially, WAEMU countries have experienced substantially lower rates of inflation than the non-WAEMU countries, but the record with respect to economic activity is mixed. While in 1975–79, growth in WAEMU countries was considerably higher than in neighboring countries of the region, during 1986–93 the WAEMU countries experienced lower real GDP growth, lower export growth, and lower savings and investment. In the 1994—98 period following the devaluation of the CFA franc, however, the WAEMU countries once again had higher GDP and export growth than non-WAEMU countries. Savings and investment ratios rose in the WAEMU countries, while they stagnated in non-WAEMU countries15 (see Table 3.1 and Figure 3.1).

Table 3.1.

ECOWAS: Selected Indicators

article image
Sources: IMF African Department; IMF World Economic Outlook databases.

Includes Benin, Burkina Faso, Côte d’Ivoire, Mali, Niger, Senegal and Togo.

Including grants.

Includes Cape Verde, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Nigeria, and Sierra Leone.

Figure 3.1.
Figure 3.1.

WAEMU versus Non-WAEMO Countries: Selected Indicators

Sources: IMF African Department; IMF World Economic Outlook database; IMF Information System database; IMF staff estimates; World Bank, World Tables 1995.

Assessment

Most of the non-WAEMU countries have moved away from a system that allocated foreign exchange through non-market processes, contributing to a highly overvalued real effective exchange rate and a very high parallel market premium. These regimes were harmful to growth (Easterly and Levine, 1997; Collier and Gunning, 1999). Trade and exchange rate systems have been liberalized, so that in most countries there are few restrictions on foreign exchange for current account transactions. (Table 3.2 gives details of exchange regimes and dates when countries accepted the current account convertibility associated with Article VIII status under the IMF’s Articles of Agreement.) Movement toward more market-determined, flexible exchange rate systems has been a centerpiece of reform programs in many of these countries. What do the above descriptions of these countries’ policies and performance tell us about the experience under market-determined rates?

Table 3.2.

ECOWAS Members: Exchange Arrangements

article image

With no preannounced path for the exchange rate.

While not yet formalized by acceptance of Article VIII of the IMF’s Articles of Agreement, current account restrictions have been lifted, in practice.

  • Movements to market-determined rates in the contexts of floats, auctions, and inter-bank markets that made significant progress in unifying official and parallel rates did not lead to immediate, large increases in the level of inflation, as had been feared.16

  • The extent to which the exchange rates are currently market-determined varies significantly across countries. Central banks often intervene heavily to manage the exchange rate.

  • Since the exchange rate is no longer the nominal anchor for price stability, governments have chosen various forms of monetary nominal anchors. The root causes of losses of control over inflation, however, have come from the inability to shield the central bank from weak fiscal discipline or from losses of fiscal control in the face of shocks.

  • Most of the countries achieved significant depreciations of the real effective exchange rate following the adoption of reform programs. In recent years, however, real effective exchange rates have either fluctuated around a constant trend or appreciated, implying that for some countries, competitiveness relative to the WAEMU countries following the 1994 CFA franc devaluation has eroded.

  • More flexible exchange rate arrangements have allowed adjustment of real effective exchange rates to terms of trade movements with fewer periods of serious misalignment.

  • Institutionally, many countries have moved to market-determined rates and foreign exchange allocation through interbank markets. The development of efficient interbank markets, however, has been hindered by structural problems in the financial sector: small market size, limited competition across banks (including in some cases collusion), government involvement or management of banks, limited financial instruments, and solvency and liquidity problems.

  • Thin markets can lead to excessive volatility of the exchange rate with negative consequences for real sector activities. Central banks seem to have made some progress in intervening to smooth fluctuations. (Potential trade-offs between exchange rate volatility and interest rate volatility can arise, however.)

  • Heavy intervention to resist nominal depreciation can create problems of high domestic interest rates, which add to the fiscal costs of servicing domestic debt and can have negative consequences for economic activity.

  • Policymakers operating in flexible exchange rate systems perceive that there is a policy dilemma in terms of maintaining a competitive exchange rate and, at the same time, avoiding acceleration and instability in inflation. Although cognizant of the need to allow the exchange rate to depreciate in response to market forces so that the real effective exchange rate is maintained at a competitive level, policymakers are often concerned that rapid nominal depreciation will ignite inflation.

In sum, neither pegged rates nor flexible rates on their own provide an easy solution for the major policy challenges facing countries in the region. Neither option is a panacea. A pegged rate (to the French franc) in WAEMU led to large overvaluations and severe recession in the late 1980s and early 1990s. By allowing a measure of flexibility in response to severe terms of trade shocks, flexible rates have cushioned some of the negative effects on output. They often have not been managed in a disciplined way, however, and as a result, they often have been accompanied by exchange rate instability and high inflation.

Cited By

  • Allen, Polly Reynolds, 1976,Organization and Administration of a Monetary Union,” Princeton Studies in International Finance No. 38 (Princeton: Princeton University Press).

    • Search Google Scholar
    • Export Citation
  • Asante, S.K.B., and Alex Ntim Abankwa, 1999, A Study of the Impact of the West African Economic and Monetary Union (UEMOA) on Ghana, draft report submitted to the Ministry of Finance Accra, Ghana (June 15).

    • Search Google Scholar
    • Export Citation
  • Azam, Jean-Paul, and Alpha Oumar Diakité, 1999,Macroeconomic Policies and Exchange Rate Management in African Economies: The Guinean Case” (unpublished).

    • Search Google Scholar
    • Export Citation
  • Bank of France, 1999, La Zone Franc, Rapport 1998 (Paris: Bank of France).

  • Barro, Robert, and David Gordon, 1983,Rules, Discretion and Reputation in a Model of Monetary Policy,Journal of Monetary Economics, Vol. 12 (July), pp. 101 –21.

    • Search Google Scholar
    • Export Citation
  • Cashin, Paul, and Catherine Pattillo, 2000,Terms of Trade Shocks in Africa: Are They Short-Lived or Long-Lived?,IMF Working Paper 00/72 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Cobham, David, and Peter Robson, 1994,Monetary Integration in Africa; A Deliberately European Perspective,” World Development, Vol. 22 (No. 3), pp. 285 –99.

    • Search Google Scholar
    • Export Citation
  • Cohen, Benjamin J., 1998, The Geography of Money (Ithaca: Cornell University Press).

  • Coe, David, and Alexander Hoffmaister, 1999,North-South Trade: Is Africa Unusual?,Journal of African Economies, Vol. 8 (No. 2) pp. 228 –56.

    • Search Google Scholar
    • Export Citation
  • Collier, Paul, 1991,Africa’s External Economic Relations, 1960-90,African Affairs, Vol. 90 (July), pp. 339 –56.

  • Collier, Paul, and Jan Willem Gunning, 1999,Why Has Africa Grown Slowly?,Journal of Economic Perspectives, Vol. 13 (No. 3), pp. 3 –22.

    • Search Google Scholar
    • Export Citation
  • Corden, W. M., 1972,Monetary Integration,” Essays in International Finance No. 93 (Princeton: Princeton University Press).

  • D’Almeida, Claude, 1998, Le devenir du franc CFA (Cotonou, Benin: Editions Perspectives Africaines, 2nd ed.).

  • Devarajan, Shantayanan, and Jaime de Melo, 1987,Evaluating Participation in African Monetary Unions: A Statistical Analysis of the CFA Zones,World Development, Vol. 15 (No. 4), pp. 483 –96.

    • Search Google Scholar
    • Export Citation
  • Devarajan, Shantayanan, and Jaime de Melo, 1992,Membership in the CFA Zone: Odyssean Journey or Trojan Horse?,in Economic Reform in Sub-Saharan Africa, ed. by Ajay Chhibber and Stanley Fischer (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Devarajan, Shantayanan, and Dani Rodrik, 1991,Do the Benefits of Fixed Exchange Rates Outweigh Their Costs? The Franc Zone in Africa,” NBER Working Paper No. 3727 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Easterly, William and Ross Levine, 1997,Africa’s Growth Tragedy: Policies and Ethnic Divisions,Quarterly Journal of Economics, Vol. 112 (November), pp. 1203 –50.

    • Search Google Scholar
    • Export Citation
  • Elbadawi, Ibrahim, 1997,The Impact of Regional Trade and Monetary Schemes on Intra-Sub-Saharan Africa Trade,in Regional Integration and Trade Liberalization in Sub-Saharan Africa, Vol. 3, ed. by T. Ademola Oyejide, Ibrahim Elbadawi, and Paul Collier (New York: St. Martin’s Press).

    • Search Google Scholar
    • Export Citation
  • Elbadawi, Ibrahim, and Nader Majd, 1996,Adjustment and Economic Performance Under a Fixed Exchange Rate: A Comparative Analysis of the CFA Zone,World Development, Vol. 24 (No. 5), pp. 939 –51.

    • Search Google Scholar
    • Export Citation
  • Europa World Year Book of 1992, Vols. I—II, 1992 (London: Europa Publications).

  • Foroutan, Faezeh, and Lant Pritchett, 1993,Intra-Sub-Saharan African Trade: Is It Too Little?Journal of African Economies, Vol. 2 (No. 5), pp. 74 –105.

    • Search Google Scholar
    • Export Citation
  • Frankel, Jeffrey, and Andrew Rose, 1998,The Endogeneity of the Optimum Currency Area Criteria,Economic Journal, Vol. 108 (July), pp. 1009 –25.

    • Search Google Scholar
    • Export Citation
  • Frankel, Jeffrey, and Andrew Rose, 2000,Estimating the Effect of Currency Unions on Trade and Output,” NBER Working Paper No. 7857 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Gnassou, A. Laure, 1999,Après l’euro: quel statut juridique pour la zone franc africaine?Afrique contemporaine, No. 189 (January-March), pp. 6 –22.

    • Search Google Scholar
    • Export Citation
  • Gros, Daniel, 1993,Costs and Benefits of Economic and Monetary Union: An Application to the Former Soviet Union,” in Policy Issues in the Operation of Currency Unions, ed. by P.R. Masson and M.P. Taylor (Cambridge, England: Cambridge University Press).

    • Search Google Scholar
    • Export Citation
  • Guillaume, Dominique, and David Stasavage, 2000,Improving Policy Credibility: Is There a Case for African Monetary Unions?World Development, Vol. 28 (No. 8), pp. 1391 –1407.

    • Search Google Scholar
    • Export Citation
  • Guillaumont, Patrick, and Sylviane Guillaumont, 1984, Zone franc et développement africain (Paris: Economica).

  • Guillaumont, Patrick, and Sylviane Guillaumont-Jeanneney, 1993,L’Intégration économique: un nouvel enjeu pour la zone franc,Revue d’économie du développement, No. 2, pp. 83 –112.

    • Search Google Scholar
    • Export Citation
  • Guillaumont, Patrick, and Sylviane Guillaumont-Jeanneney, and Jean-François Brun, 1999,How Instability Lowers African Growth,Journal of African Economies, Vol. 8 (No. 1), pp. 87 –107.

    • Search Google Scholar
    • Export Citation
  • Hanink, Dean, M., and J. Henry Owusu, 1998,Has ECOWAS Promoted Trade Among Its Members,Journal of African Economies, Vol. 7 (No. 3), pp. 363 –83.

    • Search Google Scholar
    • Export Citation
  • Hausman, R., M. Gavin, C. Pages-Serra, and E. Stein, 1999,Financial Turmoil and the Choice of Exchange Rate Regime(unpublished; Washington: Inter-American Development Bank).

    • Search Google Scholar
    • Export Citation
  • Hernández-Catá Ernesto and others, 1998, The West African Economic and Monetary Union: Recent Developments and Policy Issues, IMF Occasional Paper No. 170 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Hoffmaister, Alexander, Jorge Roldós, and Peter Wickham, 1998,Macroeconomic Fluctuations in Sub-Saharan Africa,Staff Papers, International Monetary Fund, Vol. 45 (January), pp. 132 –60.

    • Search Google Scholar
    • Export Citation
  • Hugon, Philippe, 1999, La zone franc à l’heure de l’euro (Paris: Karthala).

  • International Monetary Fund, 1999, IMF Direction of Trade Statistics, 1999 (Washington).

  • International Monetary Fund, 1999, World Economic Outlook, October 1999, World Economic and Financial Surveys (Washington).

  • International Monetary Fund, 2000,WAEMU: Recent Economic Developments and Regional Policy Issues in 1999,” May (Washington).

  • Irving, Jacqueline, 1999,For Better or for Worse: the Euro and the CFA Franc,Africa Recovery, Vol. 12 (April), pp. 1 –29.

  • Kouyaté, Lansane, 2000,ECOWAS Interim Report by the Executive Secretary,Abuja, Nigeria (April).

  • Laporte, Bertrand, 1998,Contraintes Structurelles, Politiques Nationales et Cooperation Regionale: Determinants des Echanges entre les pays d’Afrique de l’Ouest?,Canadian Journal of Development Studies, Vol. 19 (No. 1), pp. 97 –116.

    • Search Google Scholar
    • Export Citation
  • Mainwaring, Scott, and Matthew Soberg Shugart, eds., 1997, Presidentialism and Democracy in Latin America (Cambridge, England: Cambridge University Press).

    • Search Google Scholar
    • Export Citation
  • Mamdou, Ousmande Samba, 1997,The CFAF Devaluation, Naira Parallel Exchange Rate and Niger’s Competitiveness,Journal of African Economies, Vol. 6 (March), pp. 85 –111.

    • Search Google Scholar
    • Export Citation
  • Masson, Paul, Miguel Savastano, and Sunil Sharma, 1997,The Scope for Inflation Targeting in Developing Countries,IMF Working Paper 97/130 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • McPherson, Malcolm F., and Steven Radelet, 1991,Economic Reform in the Gambia: Policies, Politics, Foreign Aid, and Luck,in Reforming Economic Systems in Developing Countries, ed. by Dwight Perkins and Michael Roemer (Cambridge, Massachusetts: Harvard University Press).

    • Search Google Scholar
    • Export Citation
  • Monga, Célestin, and Jean-Claude Tchatchouang 1996, Sortir du Piège Monétaire (Paris: Economica).

  • Moreno-Villalaz, Juan Luis, 1999,Lessons from the Monetary Experience of Panama: A Dollar Economy with Financial Integration,Cato Journal, Vol. 18 (Winter), pp. 421 –39.

    • Search Google Scholar
    • Export Citation
  • Morris, Stephen, 1995,Inflation Dynamics and the Parallel Market for Foreign Exchange,Journal of Development Economics, Vol. 46 (April), pp. 295 –316.

    • Search Google Scholar
    • Export Citation
  • Moser, Gary, Scott Rogers, Reinhold van Til, and other, 1997, Nigeria: Experience with Structural Adjustment, IMF Occasional Paper No. 148 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Mundell, Robert, 1961,A Theory of Optimum Currency Areas,American Economic Review, Vol. 51 (September), pp. 657 –65.

  • Nascimento, Jean-Claude, 1994,Monetary Policy in Unified Currency Areas: The Cases of the CAMA and ECCA during 1976–90,IMF Working Paper 94/11 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Organization for Economic Cooperation and Development, 1972, Stock of Private Direct Investments by D.A.C. Countries in Developing Countries, End 1967 (Paris: OECD).

    • Search Google Scholar
    • Export Citation
  • Pinto, Brian, 1989,Black Market Premia, Exchange Rate Unification, and Inflation in Sub-Saharan Africa, World Bank Economic Review, Vol. 3, pp. 321 –38.

    • Search Google Scholar
    • Export Citation
  • Pinto, Brian, 1991,Black Markets for Foreign Exchange, Real Exchange Rates and Inflation, Journal of International Economics, Vol.30 (February), pp. 121 –35.

    • Search Google Scholar
    • Export Citation
  • Radelet, Steven, C., 1993,Gambia’s Economic Recovery: Policy Reforms, Foreign Aid, or Rain?Journal of Policy Modeling, Vol. 15 (June), pp. 251 –76.

    • Search Google Scholar
    • Export Citation
  • Randall, Ruby, 1998,Interest Rate Spreads in the Eastern Caribbean,IMF Working Paper 98/59 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Rodrik, Dani, 1999, The New Global Economy and Developing Countries: Making Openness Work (Washington: Overseas Development Council).

  • Rose, Andrew, 2000,One Money, One Market: Estimating the Effect of Common Currencies on Trade,NBER Working Paper No. 7432 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Sala-i-Martin, Xavier, and Jeffrey Sachs, 1992,Fiscal Federalism and Optimum Currency Areas: Evidence for Europe from the United States,in Establishing a Central Bank: Issues in Europe and Lessons from the U.S., ed. by M.B. Canzoneri, V. Grilli, and PR. Masson (Cambridge, England: Cambridge University Press).

    • Search Google Scholar
    • Export Citation
  • Stasavage, David, 1996,The CFA Franc Zone and Fiscal Discipline,Journal of African Economies, Vol. 6 (No.1), pp. 132 –67.

  • Subramanian, Arvind, and Natalia Tamirisa, 2000,Africa, An Overtrader(unpublished; Washington: International Monetary Fund).

  • Tavlas, George, 2000,On the Exchange Rate as a Nominal Anchor: The Rise and Fall of the Credibility Hypothesis,The Economic Record, Vol. 76 (June), pp. 183 –201.

    • Search Google Scholar
    • Export Citation
  • Tjirongo, Meshack Tunee, 1998,Exchange Rate Policy Options for Namibia(Ph.D. dissertation; Oxford, England: University of Oxford).

    • Search Google Scholar
    • Export Citation
  • Tornell, Aaron, and Andrés Velasco, 1995,Fixed versus Flexible Exchange Rates: Which Provides More Fiscal Discipline?” NBER Working Paper No. 5108 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • United Nations Conference on Trade and Development 1999, World Investment Report—1999 Foreign Direct Investment and the Challenge of Development (New York: United Nations).

    • Search Google Scholar
    • Export Citation
  • Van Beek, Frits, and others, 2000, The Eastern Caribbean Currency Union: Institutions, Performance, and Policy Issues, IMF Occasional Paper No. 195 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • World Bank, 2000,Part II: West Africa, Key Trends and Regional Perspectives,” West Africa Regional Assistance Strategy Discussion Paper (unpublished).

    • Search Google Scholar
    • Export Citation
  • Yeats, Alexander, 1998,What Can Be Expected from African Regional Trade Arrangements? Some Empirical Evidence,Policy Research Working Paper No. 2004 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation