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AEC 2008 - The Impact Of The Euro-CFA Franc Zone On Economic Growth In Sub-Saharan Africa


This paper examines the effects of regional euro-currency integration on economic growth in Sub-Saharan Africa. As having a currency pegged to the euro is likely to be a source of shocks to output, we parameterize a Solow growth model by specifying the level of technology as a function of membership in a regional euro-currency union. Parameter estimates from panel data indicate that for the two regional euro-currency unions we consider, membership in the Central African Economic and Monetary Community (CAEMC) had a positive effect on economic growth over the 1999-2007 time period. Our results suggest that the regional integration of currency has benefits in Sub-Saharan Africa, and the expansion of existing, or creation of additional currency unions similar to CAEMC could improve living standards.

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