African Social Science Review


Several attempts to establish common currency by regional trade blocs have been carried out in Africa and the continent is home to two existing common currency unions using the CFA francs, respectively. This paper focuses on the effects of common currency on economic growth in the CEMAC custom union. The study applies the sharp regression discontinuity design model to analyse the causal effects of the common currency on economic growth. The causal effects are identified by exploiting the discontinuity of the individual currency in favour of a regional one. This is a done by evaluating the value of GDP per capita as a proxy for economic growth before and after the implementation of the common currency in 1994. Our findings show that the monetary policy change instituted in the CEMAC region in 1994 has not played any significant role in promoting economic growth in the CEMAC region. Instead, the CEMAC customs union has performed on average poorly compare to its predecessor UDEAC and its regional counterpart such as UEMOA that uses a similar currency with similar exchange rate.



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