Journal of African Trade

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Volume 8, Issue 1, December 2021, Pages 13 - 22

Common Currency and Intra-Regional Trade in the Central African Monetary Community (CEMAC)

Authors
Divine Ngenyeh Kangami1, 2, *, ORCID, Oluyele Akinkugbe1, ORCID
1Department of Economics, School of Economics and Finance, University of the Witwatersrand, WITS 2050, Johannesburg, RSA
2Department of Business Management, African Leadership University, Mauritius
*Corresponding author. Email: divine.ngenyeh@gmail.com
Corresponding Author
Divine Ngenyeh Kangami
Received 2 January 2020, Accepted 4 May 2021, Available Online 7 June 2021.
DOI
10.2991/jat.k.210521.001How to use a DOI?
Keywords
CEMAC; CFA franc; common currency; difference in differences; exchange rate; intra-regional trade; real effective exchange rate; threshold autoregression; WAEMU
Abstract

We applied the threshold autoregressive and difference-in-differences techniques to examine the effects of adopting a common currency on bilateral trade flows between member states of the Central African Economic and Monetary Community (CEMAC) customs union, over the period from 1980 to 2013. We found evidence of a sample split—a probable indication of the presence of a single threshold corresponding to the year 1994 when the Coopération financière en Afrique centrale (CFA) franc, a common currency, was introduced in CEMAC. Our results also show that the adoption of the CFA franc did not contribute to growth in CEMAC intra-regional trade. The results are robust in that they take into account country fixed effects and suggest a turning point after 1994, between the common currency and the flow of intra-regional trade. More generally, our results provide evidence against the claim that a common currency leads to increased intra-regional trade.

Copyright
© 2021 African Export-Import Bank. Publishing services by Atlantis Press International B.V.
Open Access
This is an open access article distributed under the CC BY-NC 4.0 license (http://creativecommons.org/licenses/by-nc/4.0/).

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Journal
Journal of African Trade
Volume-Issue
8 - 1
Pages
13 - 22
Publication Date
2021/06/07
ISSN (Online)
2214-8523
ISSN (Print)
2214-8515
DOI
10.2991/jat.k.210521.001How to use a DOI?
Copyright
© 2021 African Export-Import Bank. Publishing services by Atlantis Press International B.V.
Open Access
This is an open access article distributed under the CC BY-NC 4.0 license (http://creativecommons.org/licenses/by-nc/4.0/).

Cite this article

risenwbib
TY  - JOUR
AU  - Divine Ngenyeh Kangami
AU  - Oluyele Akinkugbe
PY  - 2021
DA  - 2021/06/07
TI  - Common Currency and Intra-Regional Trade in the Central African Monetary Community (CEMAC)
JO  - Journal of African Trade
SP  - 13
EP  - 22
VL  - 8
IS  - 1
SN  - 2214-8523
UR  - https://doi.org/10.2991/jat.k.210521.001
DO  - 10.2991/jat.k.210521.001
ID  - Kangami2021
ER  -