Detalle Publicación

ARTÍCULO
Prospects for a monetary union in the east africa community: some empirical evidence
Autores: Caporale, G. M.; Gil Alaña, Luis Alberiko
Título de la revista: SOUTH AFRICAN JOURNAL OF ECONOMICS
ISSN: 0038-2280
Volumen: 88
Número: 2
Páginas: 174 - 185
Fecha de publicación: 2020
Lugar: WOS
Resumen:
This paper examines generalised purchasing power parity (G-PPP) and business cycle synchronisation in the East Africa Community with the aim of assessing the prospects for a monetary union. The univariate fractional integration analysis shows that the individual series exhibit unit roots and are highly persistent. The fractional bivariate cointegration tests suggest that there exist bivariate fractional cointegrating relationships between the exchange rate of the Tanzanian shilling and those of the other EAC countries, and also between the exchange rates of the Rwandan franc, the Burundian franc and the Ugandan shilling. The Fractionally Cointegrated Vector AutoRegressive (FCVAR) results imply the existence of a single cointegrating relationship between the exchange rates of the EAC countries. On the whole, there is evidence in favour of G-PPP. In addition, there appears to be a high degree of business cycle synchronisation between these economies. On both grounds, one can argue that a monetary union should be feasible.