Towards A Second Monetary Zone In West-Africa: A Test For Long-Run Convergence

📄 Project Abstract

The study investigates the possibility of the WAMZ member countries converging towards the formation of a second monetary arrangement within the West African sub-region by 2015. In this line targets were set for the member countries to be met in order to ensure a strong and viable unification. Hence, the precondition for the take-off requires that atleast three countries must satisfy atleast three primary and secondary criteria. However, despite past efforts towards this project continuous postponements have been the tradition. The work applies cointegration techniques to search for long-run convergence among the five countries; Gambia, Ghana, Guinea, Nigeria and Sierra Leone. Data on all the criteria; budget deficit/GDP ratio, inflation rate, budget deficit financing/tax revenue, gross external reserves, domestic arrears, tax revenue/GDP ratio, wage bill/tax revenue ratio, public investment/tax revenue, real interest rate and real exchange rate were analysed to test for their co-movem...