On the Computation and Essence of the Nominal Convergence Criteria for Africa Currency Union: ECOWAS in Perspective

Abban, Stanley (2020): On the Computation and Essence of the Nominal Convergence Criteria for Africa Currency Union: ECOWAS in Perspective.

Abstract

The ECOWAS in a quest to form a currency union prompted the set out nominal convergence criteria for member states. The study seeks to delineate the importance of the nominal convergence criteria to ensure price and exchange rate stability. In this context, the revised ECOWAS convergence criteria were elaborated to unveil the degree of convergence. Also, the study computed for the realistic nominal convergence targets supposing the union is formed and suggested ex-ante steps to fast track convergence. Additionally, the study showed the exigency for trade and institutional convergence through policy coordination. The study concludes that countries should commit to attaining the convergence criteria in the shortest possible time to aid in the realization of the policy. The study recommends that relatively exposing the large informal sector, ensuring political ramification, and encouraging savings is key to achieving the nominal convergence criteria.

• Item Type: MPRA Paper
• Language: English
• Keywords: nominal convergence criteria, currency union, large informal sector, Optimal Currency Area, inflation, public deficits, public debts, reserves.
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E61 - Policy Objectives ; Policy Designs and Consistency ; Policy Coordination; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy ; Stabilization ; Treasury Policy; H - Public Economics > H2 - Taxation, Subsidies, and Revenue

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