Modelling Monetary Union in Southern Africa: Welfare Evaluation for the CMA and SADC

This paper proposes a quantitative assessment of the welfare effects arising from the Common Monetary Area (CMA) and an array of broader groupings among Southern African Development Community (SADC) countries. Model simulations suggest that (i) participating in the CMA benefits all members; (ii) joi...

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Bibliographic Details
Published in:The South African Journal of economics 2013-06, Vol.81 (2), p.275-291
Main Authors: Debrun, Xavier, Masson, Paul R.
Format: Article
Language:English
Subjects:
Angola
Anti-inflation policy
Asymmetry
Benefits
Central banks
Common Monetary Area
Cost
E58
E61
Economic models
F33
Mauritius
monetary union
Monetary unions
Quantitative analysis
SADC
SADC countries
Simulation
Southern Africa
Southern African development community
Studies
Tanzania
Welfare economics
Welfare state
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Summary:This paper proposes a quantitative assessment of the welfare effects arising from the Common Monetary Area (CMA) and an array of broader groupings among Southern African Development Community (SADC) countries. Model simulations suggest that (i) participating in the CMA benefits all members; (ii) joining the CMA individually is beneficial for all SADC members except Angola, Mauritius and Tanzania; (iii) creating a symmetric CMA‐wide monetary union with a regional central bank carries some costs in terms of foregone anti‐inflationary credibility; and (iv) SADC‐wide symmetric monetary union continues to be beneficial for all except Mauritius, although the gains for existing CMA members are likely to be limited.
ISSN:0038-2280
1813-6982
DOI:10.1111/saje.12008