Inflation Dynamics of Franc-Zone Countries Determinants, Co-movements and Spatial Interactions

This paper shows the uneven role played in the inflation dynamics of African franc zone countries by their integration in a regional monetary union. We obtain three main results sharply contrasting the central- (CEMAC) and west-African (WAEMU) regions. First, differences in the structure of economie...

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Bibliographic Details
Published in:Open economies review 2018-04, Vol.29 (2), p.295-320
Main Authors: Girardin, Eric, Sall, Cheikh A. T.
Format: Article
Language:English
Subjects:
Development Economics
Economic models
Economic Policy
Economics
Economics and Finance
European Integration
Humanities and Social Sciences
Inflation
International Economics
Ivory
Macroeconomics/Monetary Economics//Financial Economics
Monetary unions
Research Article
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Summary:This paper shows the uneven role played in the inflation dynamics of African franc zone countries by their integration in a regional monetary union. We obtain three main results sharply contrasting the central- (CEMAC) and west-African (WAEMU) regions. First, differences in the structure of economies and national fiscal stances play a similar role in both unions and appear as potential sources of inflation differentials. Second, even though co-movements are the principal drivers of inflation dynamics in both subregions, global factors dominate regional ones in WAEMU while both play an equal role in CEMAC. Thirdly, spatial interactions are unimportant in CEMAC due to little intra-zone trade, but take an asymmetric form in WAEMU due to the large size of Ivory Coast and Senegal.
ISSN:0923-7992
1573-708X
DOI:10.1007/s11079-017-9456-x