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Estimating the Effect of Common Currency on Trade in West African Monetary Zones: A Dynamic Panel-GMM Analysis

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New Challenges in Banking and Finance

Part of the book series: Springer Proceedings in Business and Economics ((SPBE))

Abstract

The purpose of this study is to evaluate the effect of common currency on economic performance of ECOWAS member nations in terms of international trade patterns. To achieve this objective, we applied the Generalized Method of Moments (GMM) estimation technique to a dynamic panel gravity model of bilateral trade between ECOWAS countries. A dummy variable of common currency was introduced to determine if the ECOWAS member states that have already adopted a common currency (WAEMU) fare better than those that are yet to adopt a common currency (WAMZ). Results show that adoption of common currency by WAEMU states has led to better trade performance in comparison to WAMZ states. We conclude that there is a strong case for monetary integration in the ECOWAS sub-region.

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Authors and Affiliations

  1. Department of Economics, Eastern Mediterranean University, Famagusta, Northern Cyprus, Turkey

    Cagay Coskuner & Godwin Oluseye Olasehinde-Williams

Authors
  1. Cagay Coskuner
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  2. Godwin Oluseye Olasehinde-Williams
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Correspondence to Cagay Coskuner .

Editor information

Editors and Affiliations

  1. Department of Banking and Finance, Eastern Mediterranean University, Mersin, Turkey

    NESRIN ÖZATAÇ

  2. Department of Banking and Finance, Eastern Mediterranean University, Famagusta, Turkey

    Korhan K. GÖKMENOGLU

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Coskuner, C., Olasehinde-Williams, G.O. (2017). Estimating the Effect of Common Currency on Trade in West African Monetary Zones: A Dynamic Panel-GMM Analysis. In: ÖZATAÇ, N., GÖKMENOGLU, K. (eds) New Challenges in Banking and Finance. Springer Proceedings in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-66872-7_9

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