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I am grateful to Alberto Alesina, Roland Daumont, Andrew Feltenstein, Jeffrey Frankel, Peter J. Ngubumbullu, Catherine Pattillo, Dani Rodrik, and seminar participants at IMF Institute for useful comments and suggestions. The author is solely responsible, however, for all remaining errors.
The CFA franc is used in Benin, Burkina Faso, Guinea-Bissau, Côte d’Ivoire, Mali, Niger, Senegal, and Togo; the cedi for Ghana; the delasi in Gambia; the dollar in Liberia; the leone in Sierra Leone; the guinea franc in Guinea; the escudo in Cape Verde; the ouguiya in Mauritania; and the naira for Nigeria. Notice that Guinea-Bissau formerly used the peso but joined the CFA zone in 1997.
CFA stands for Communauté Financière Africaine. The CFA franc is the common currency used by 15 African countries. There are two CFA zones with two different central banks, but both issue the same currency, the CFA franc. The West Africa Economic and Monetary Union (WAEMU) includes Benin, Burkina Faso, Guinea-Bissau, Côte d’Ivoire, Mali, Niger, Senegal, and Togo. The Central Africa Economic and Monetary Union (CAEMU) includes Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea, and Gabon. All but one of the West African CFA countries are former French colonies, the same being true for the Central African CFA countries. The fifteenth country is Comoros, which issues its own form of CFA franc but maintains a fixed parity with the other two.
Notice that there is undoubtedly considerable informal trade that is not recorded.
Notice that this study is not the first to make use of an arbitrary cut-off choice. Alesina, Barro, and Tenreyro (2002) for instance, investigating the best anchor among the world major currencies for different countries use a cut-off of four percentage point higher for trade share. See their paper for more details.
I use fewer observations when the full time series from 1960 to 2000 is not available. However, I drop country-pairs for which fewer than 18 observations are available.