Estimating the Effect of Common Currency on Trade in West African Monetary Zones: A Dynamic Panel-GMM Analysis

Coskuner C., OLASEHINDE WILLIAMS G. O.

2nd International Conference on Banking and Finance Perspectives, ICBFP 2017, Famagusta, Kıbrıs (Gkry), 21 Nisan 2017, ss.105-114 identifier

  • Yayın Türü: Bildiri / Tam Metin Bildiri
  • Doi Numarası: 10.1007/978-3-319-66872-7_9
  • Basıldığı Şehir: Famagusta
  • Basıldığı Ülke: Kıbrıs (Gkry)
  • Sayfa Sayıları: ss.105-114
  • Anahtar Kelimeler: Dynamics, GMM, Gravity model, International trade, Monetary integration
  • İstanbul Ticaret Üniversitesi Adresli: Evet

Özet

The purpose of this study is to evaluate the effect of common currency on economic performance of ECOWAS member nations in terms of international trade patterns. To achieve this objective, we applied the Generalized Method of Moments (GMM) estimation technique to a dynamic panel gravity model of bilateral trade between ECOWAS countries. A dummy variable of common currency was introduced to determine if the ECOWAS member states that have already adopted a common currency (WAEMU) fare better than those that are yet to adopt a common currency (WAMZ). Results show that adoption of common currency by WAEMU states has led to better trade performance in comparison to WAMZ states. We conclude that there is a strong case for monetary integration in the ECOWAS sub-region.