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

Anja Shortland, David Stasavage

Research output: Contribution to journalArticle

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 languageEnglish (US)
Pages (from-to)518-535
Number of pages18
JournalJournal of African Economies
Volume13
Issue number4
DOIs
StatePublished - Dec 2004

ASJC Scopus subject areas

  • Development
  • Economics and Econometrics

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