Incidence de l'ouverture économique et de la libéralisation financière des pays de la Communauté Économique des États de l'Afrique de l'Ouest sur leurs activités économiques

Kebalo, Léleng (2017): Incidence de l'ouverture économique et de la libéralisation financière des pays de la Communauté Économique des États de l'Afrique de l'Ouest sur leurs activités économiques.

Abstract

This paper analyzes the effects of the high economic openness of West African economies coupled with liability dollarization, on their economic activities. By using a dynamic stochastic general equilibrium model in a small open economy framework, and performing an experiment based on a case of moderate economic openness and another case on the high economic openness, we find that the high economic openness of west african economies constitutes a brake for their economic progress. This external constraint annihilates the effects of the economic policies implemented to stimulate economic growth, and consequently create macroeconomic imbalances. For small countries like those in West Africa, a moderate economic openness would be advantageous because it would allow them to develop a domestic market that presents many economic advantages and above all, to protect it from foreign competition. It is necessary to decrease now this dependency in order to avoid a polarization of economic blocks after the creation of a Currency Union in West Africa.

• Item Type: MPRA Paper
• English Title: Impact of economic openness and financial liberalization of the Economic Community of West African States on their economic activities
• Language: French
• Keywords: Economic openness, Financial liberalization, economic growth, Economic integration, Financial accelerator, DSGE model
• Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E66 - General Outlook and Conditions; F - International Economics > F3 - International Finance > F34 - International Lending and Debt Problems; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F44 - International Business Cycles

References

Atta-Mensah, J. et Dib, A. (2008). Bank lending, credit shocks, and the transmission of canadian monetary policy. International Review of Economics and Finance, 17:159–176.

Barro, R. J. et i Martin, X. S. (1995). Economic growth. New York : McGraw Hill.

Bernanke, B. S., Gertler, M. et Gilchrist, S. (1999). The financial accelerator in a ouantitative business cycle framework. Handbook of Macroeconomics : Elsevier, Chap. 21, in Taylor, J. B. and M. Woodford, 1:1341–1393.

Calvo, A. (2002). On dollarization. Economics of Transition, 10:393 – 403.

Calvo, G. A. (1983). Staggered prices in utility maximizing framework. Journal of Monetary Economics, 12:383–398.

Cespedes, L. F., Chang, R. et Velasco, A.(2000). Balance sheets and exchange rate policy. Working Paper 7840, National Bureau of Economic Research.

Choi, W. G. et Cook, D. (2004). Liability dollarization and the bank balance sheet channel. Journal of International Economics, 64:247-275.

Collier, P. et Dehn, J. (2001). Aid, shocks, and growth. World Bank Working Paper, (2688).

Combes, J. L. et Guillaumont, P. (2002). Commodity price volatility, vulnerability and development. Development Policy Review, 20:25–39.

Corsetti, G., Dedola, L. et Leduc, S. (2008). High exchange-rate volatility and low passthrough. Journal of Monetary Economics, 55: 1113–1128.

Deaton, A. et Miller, R. (1996). International commodity prices, macroeconomic performance and politics in sub-saharan africa. Journal of African Economies, 5.

Devereux, M. B., Lane, P. R. et Xu, J. (2006). Exchange rates and monetary policy in emerging market economies. The Economic Journal, 116(511):478–506.

Easterly, W. (2005). What did structural adjustment adjust ? : The association of policies and growth with repeated imf and world bank adjustment loans. Journal of Development Economics, 76:1–22.

Eichengreen, B. et Hausmann, R. (1999). Exchange rates and financial fragility. new challenges for monetary policy. Federal Reserve Bank of Kansas City, Kansas City, pages 329– 368.

Elekdag, S. et Tchakarov, I. (2007). Balance sheets, exchange rate policy, and welfare. Journal of Economic Dynamics and Control, 31(12):3986–4015.

Fosu, K. A. (1992). Effect of export instability on economic growth in africa. The Journal of Developing Areas, 26:323–332.

Gali, J. et Gertler, J. (1999). Inflation dynamics : a structural econometric analysis. Journal of Monetary Economics, 44:195 – 222.

Gries, T. et Redlin, M. (2012). Trade openness and economic growth : A panel causality analysis. Center for international economics Working Paper No. 2011-06.

Grossman, G. et Helpman, E. (1990). Comparative advantage and long-run growth. American Economic Review, 80:796–815.

Gulhati, R. (1990). Who makes economic policy in africa and how ? World Development, 18:1147–1161.

Harrison, A. (1996). Openness and growth : A time-series, cross-country analysis for developing countries. Journal of Development Economics, 48:419–447.

Herbst, J. (1990). The structural adjustment of politics in africa. World Development, 18(July).

Kitano, S. et Takaku, K. (2015). Capital controls, monetary policy and balance sheets in a small open economy. Disucssion Paper Series, Kobe University.

Koze, M. A. et Reizman, R. (2001). Trade shocks and macroeconomic fluctuations in Africa. Journal of Development Economics, 65:55–80.

Krugman, P. (1994). The myth of asia’s miracle. Foreign Affairs, 73(6):62–78.

Lall, S. (1995). Structural adjustment and african industry. World Development, 23: 2019–2031.

Lama, R. et Rabanal, P. (2014). Deciding to enter a monetary union : The role of trade and financial linkages. European Economic Review, 72:138–165.

Ozkan, F. G. et Unsal, D. F. (2012). Global financial crisis, financial contagion and emerging markets. IMF Working Paper.

Rodríguez, F. et Rodrik, D. (2001). Trade policy and economic growth : A skeptics guide to the cross-national evidence. In Bernanke, B. et Rogoff, K., éditeurs : NBER macroeconomics annual 2000, page 261–325.

Rodrik, D. (1990). How should structural adjustment programs be designed ? World Development, 18(July):933–947. Rose, A. K. (2000). One money, one market : Estimation the effect of common currencies on trade. Economic Policy, 30:9–45.

Rose, A. K. (2001). Currency unions and trade : The effect is large. Economic Policy, 16: 449–461.

Rotemberg, J. et Woodford, M. (1997). An optimization-based econometric framework for the evaluation of monetary policy. in : Bernanke, b.s., rotemberg, j.j. (eds.). NBER Macroeconomics Annual.

Yanikkaya, H. (2003). Trade openness and economic growth : a cross-country empirical investigation. Journal of Development Economics, 72:57–89.