Fiscal reform and monetary union in West Africa
Article first published online: 4 NOV 2008
Copyright © 2008 John Wiley & Sons, Ltd.
Journal of International Development
Volume 22, Issue 1, pages 86–102, January 2010
How to Cite
Hefeker, C. (2010), Fiscal reform and monetary union in West Africa. J. Int. Dev., 22: 86–102. doi: 10.1002/jid.1529
- Issue published online: 23 DEC 2009
- Article first published online: 4 NOV 2008
- West Africa;
- monetary union;
- fiscal policy;
- structural reforms
- JEL Classification: F 33, E 61, E 63
This paper explores the interaction between the proposed monetary union for ECOWAS and structural reforms of fiscal policy. In a monetary union among symmetric countries members run a more distortionary fiscal policy and structural reform efforts fall. This can also follow in countries that adopt a unilateral peg or a foreign currency. In a monetary union with asymmetric countries reforms increase in countries that are relatively less distorted and the reverse happens in more distorted economies. Most West African Economic and Monetary Union members are thus likely to have a less distortionary fiscal policy after forming a monetary union with other ECOWAS members. Copyright © 2008 John Wiley & Sons, Ltd.