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2008 AEC - Endogenous optimal currency areas: The case of the Central African Economic and Monetary Community


The Central African Economic and Monetary Community (CAEMC) has been a monetary union for several decades now. According to the hypothesis of endogenous optimal currency areas, the degree of business cycles synchronization across its member states should be significantly higher today than 40 years ago. This paper examines cycle synchronization along three different statistical dimensions and shows that (i) synchronization has remained low throughout the period 1960-2007, but (ii) it has marginally increased over time. These findings bear important implications for the design of the economic integration process in Africa. A chronology of business cycles in CAEMC countries is provided.

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