What determines monetary policy in the Franc Zone? Estimating a reaction function for the BCEAO

Anja Shortland; David Stasavage

doi:10.1093/jae/ejh027

What determines monetary policy in the Franc Zone? Estimating a reaction function for the BCEAO

Anja Shortland, David Stasavage

Strategies to Reduce Inequality

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Abstract

This paper examines to what extent the central bank for the West African Economic and Monetary Union (BCEAO) has used interest rate policy in response to domestic economic developments. We show that while in the long run the BCEAO matches changes in French (Eurozone) interest rates one for one, in the short run it retains freedom to react to domestic economic variables, such as inflation, the output gap, its foreign exchange position and government borrowing.

Original language	English (US)
Pages (from-to)	518-535
Number of pages	18
Journal	Journal of African Economies
Volume	13
Issue number	4
DOIs	https://doi.org/10.1093/jae/ejh027
State	Published - Dec 2004

ASJC Scopus subject areas

Development
Economics and Econometrics

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abstract = "This paper examines to what extent the central bank for the West African Economic and Monetary Union (BCEAO) has used interest rate policy in response to domestic economic developments. We show that while in the long run the BCEAO matches changes in French (Eurozone) interest rates one for one, in the short run it retains freedom to react to domestic economic variables, such as inflation, the output gap, its foreign exchange position and government borrowing.",

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What determines monetary policy in the Franc Zone? Estimating a reaction function for the BCEAO

Abstract

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