Economic growth and monetary union in sub–Saharan Africa: new evidence on the effects of CFA–zone membership.

Abstract

Estimation of a structural economic growth equation using data for 26 sub–Saharan African countries over the years 1974–92 reveals positive growth effects of membership in the French African Community (CFA) zone stemming from an enhanced productivity of investment. However, these effects appear to be limited to the pre–1980 period, despite the CFA's superior inflation performance relative to non–CFA countries thereafter. The results also support the importance of distinguishing between expected and unexpected inflation in analysing the growth effects of inflation and of CFA membership.