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West A frican Single Currency and Competitiveness
Author(s) -
Dufrénot Gilles,
Sugimoto Kimiko
Publication year - 2013
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/rode.12064
Subject(s) - counterfactual thinking , economics , currency , liberian dollar , exchange rate , single currency , value (mathematics) , commodity , revenue , international economics , monetary economics , us dollar , market economy , philosophy , accounting , epistemology , finance , machine learning , computer science
This paper compares different nominal anchors to promote internal and external competitiveness in the case of a fixed exchange rate regime for the future single regional currency of the Economic Community of the West A frican States ( ECOWAS ). We use counterfactual analyses and estimate a model of dependent economy for small commodity exporting countries. We consider four foreign anchor currencies: the US dollar, the euro, the yen and the yuan. Our simulations show little support for a dominant peg in the ECOWAS area if they pursue several goals: maximizing the export revenues, minimizing their variability, stabilizing them and minimizing the real exchange rate misalignments from the fundamental value.

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