Fiscal Convergence In Africa: What Role For Regional Economic Communities?


Theme

Accelerating policy and institutional harmonization, people's integration across the continent


Authors

  • Vigninou Gammadigbe
  • Ismaël Issifou
  • Daouda Sembene
  • Sampawende J.-A. Tapsoba

Download paper (663 kB)


Abstract

The literature on Optimal Currency Areas (OCA) has identified several channels for the ex post justification of common monetary areas based on the synchronicity criterion. These include trade, cross-border investments, mobility of factors, mobility of goods and services, and fiscal convergence of member countries. We focus on the later for the African continent. We analyze the role of African regional economic communities (RECs) in convergence of fiscal policies from 1990 to 2015. Our estimates show that African RECs reduce significantly fiscal divergence between countries. We further find that common monetary areas are more effective in fostering fiscal convergence. This result is in line with the argument of self-validation of monetary arrangements in Africa, despite low levels of cycle synchronization and trade intensity.

AEC Partners

United Nations Economic Commission for Africa logo
You are currently offline. Some pages or content may fail to load.