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Periodical article | Leiden University catalogue | WorldCat |
Title: | Monetary Union in West Africa: An Agency of Restraint for Fiscal Policies? |
Authors: | Masson, Paul Pattillo, Catherine |
Year: | 2002 |
Periodical: | Journal of African Economies |
Volume: | 11 |
Issue: | 3 |
Period: | September |
Pages: | 387-412 |
Language: | English |
Geographic term: | West Africa |
Subjects: | international monetary relations fiscal policy Economics and Trade Politics and Government Inter-African Relations |
External link: | https://jae.oxfordjournals.org/content/11/3/387.full.pdf |
Abstract: | Could a monetary union in West Africa (either an informal monetary union of the non-CFA countries, or a possible future monetary union of all ECOWAS members) be an effective 'agency of restraint' (Collier, 1991) on fiscal policies? This paper discusses the ways, both positive and negative, that monetary union could affect fiscal discipline and the arguments for explicit fiscal restraints in the literature on the European Monetary Union (EMU), and considers their applicability to West Africa. The empirical evidence, EMU literature and CFA experience all suggest the possibility that monetary union could create the temptation for fiscal profligacy through prospects of a bail-out, or costs that are diluted through the membership. The paper concludes that a monetary union in West Africa can be an effective agency of restraint on fiscal policies only if the hands of the fiscal authorities are also tied by a strong set of fiscal restraint criteria, applicable not just for accession to monetary union, but throughout the life of the union. Bibliogr., notes, ref., sum. [Journal abstract] |