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Monetary Union in West Africa: An Agency of Restraint for Fiscal Policies?
Author: Ms. Catherine A Pattillo and Mr. Paul R Masson
Series:
IMF Working Papers
Volume/Issue:
Volume 2001: Issue 034
Language:
English
Publication Date:
01 Mar 2001
DOI:
https://doi.org/10.5089/9781451845266.001
ISBN:
9781451845266
ISSN:
1018-5941
Pages:
33
Keywords:
WP; ECOWAS country; ECOWAS monetary union project; WAEMU country; CFA franc; exchange rate; monetary union; West Africa; fiscal rules; fiscal discipline; ECOWAS; CFA franc zone; GDP ratio; WAEMU countries in ECOWAS; WAEMU monetary union; WAEMU ECOWAS country; Monetary unions; Government debt management; Government asset and liability management; Budget planning and preparation; Europe
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Could a West African monetary union (either of the non-CFA countries, or all ECOWAS members) be an effective "agency of restraint" on fiscal policies? We discuss how monetary union could affect fiscal discipline and the arguments for explicit fiscal restraints considered in the European Monetary Union literature, and their applicability to West Africa. The empirical evidence, EMU literature, and CFA experience suggest that monetary union could create the temptation for fiscal profligacy through prospects of a bailout, or costs diluted through the membership. Thus, a West African monetary union could promote fiscal discipline only if the hands of the fiscal authorities are also tied by a strong set of fiscal restraints.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund