International risk-sharing and currency unions: The CFA zones

✍ Scribed by Etienne B. Yehoue

• Publisher: John Wiley and Sons
• Year: 2010
• Tongue: English
• Weight: 248 KB
• Volume: 23
• Category: Article
• ISSN: 0954-1748
• DOI: 10.1002/jid.1735

✦ Synopsis

This paper explores income and consumption smoothing patterns among the member countries of each of the CFA zones-the CEMAC 1 and the WAEMU 2 -during the period 1980-2005. I find that for the CEMAC, about 24 per cent of shocks to GDP are smoothed through the standard channels (i.e. capital market, credit market and remittances). On the other hand, I find that 66 per cent of shocks are smoothed via foreign aid from France, and 6 per cent via central bank contributions, while reserves pooling provides no shock smoothing. For the WAEMU, I find that only 22 per cent of shocks are smoothed through the standard channels, while about 50 per cent are smoothed via foreign aid from France, 5 per cent via central bank contributions, and no smoothing via reserves pooling.