Investigating Business Cycle Synchronization In West Africa
This paper contributes to the discussion on the long term sustainability of the embryonic second monetary union in Africa, the West African Monetary Zone (WAMZ). The authors analyse the level of economic and monetary integration in West Africa by analysing the degree of growth cycle synchronisation between five candidate countries over the past thirty years. The empirical approach improves on the standard Pearson Correlation between trend and cyclical components of GDP by analyzing a measure of co-movement at higher frequencies between computed z-scores for all possible pairings of the candidate countries. The results indicate a lack of a consistent pattern of synchronized growth cycles, which raises concerns about the economic sustainability of the WAMZ, as it implies that members may face significant stabilisation costs.