This paper develops a full-fledged cost-benefit analysis of monetary integration, and applies it to the currency unions actively pursued in Africa. The benefits of monetary union come from a more credible monetary policy, while the costs derive from real shock asymmetries and fiscal disparities....

This chapter evaluates whether a monetary union makes economic sense and discusses the institutional requirements for a successful Monetary Union in West Africa (ECOWAS). The chapter considers how best the political momentum for a union can be channeled toward a fundamental improvement in...

Could a West African monetary union (either of the non-CFA countries, or all ECOWAS members) be an effective ""agency of restraint"" on fiscal policies? We discuss how monetary union could affect fiscal discipline and the arguments for explicit fiscal restraints considered in the European...

We develop a multicountry model in which governments aim at excessive spending in order to serve the narrow interests of the group in power. This puts pressure on the monetary authorities to extract seigniorage, and thus affects the incentives countries would have to participate in a monetary...

Drawing on the recent literature and experience on monetary integration in Europe, the paper examines the rationale for establishing regional currency unions in Western Africa. Despite dramatic economic, political and historical differences between the two regions, the analysis indicates that...