Responding to Shocks and Maintaining Stability in the West African Economic and Monetary Union

Departmental Papers, October 22, 2013

Source details

Canonical URL: Responding to Shocks and Maintaining Stability in the West African Economic and Monetary Union

Authors: Christina Kolerus, Aleksandra Zdzienicka, Ermal Hitaj, Douglas J Shapiro
Published: October 22, 2013
Series: Departmental Papers
DOI: https://doi.org/10.5089/9781484341186.087

The West African Economic and Monetary Union (WAEMU) faces a number of challenges in dealing with macroeconomic shocks.
The region experiences a large number of exogenous shocks:
- climate-related (e.g., droughts, floods), with a heavy toll on populations and agriculture;
- economic (e.g., terms of trade), with a large impact on key sectors and the cost of living.
Business cycle synchronization within the WAEMU seems low.
Addressing these shocks, while preserving the stability of the union, is a critical issue.
The paper discusses these issues and suggests possible reforms.

High exposure to exogenous shocks, including:
- climate-related shocks that heavily affect populations and agriculture;
- economic shocks such as terms of trade movements that affect key sectors and the cost of living.
Low business cycle synchronization across WAEMU member countries, complicating common policy responses.
The need to reconcile shock response mechanisms with the imperative of maintaining union-wide stability.

The paper suggests possible reforms to improve WAEMU’s response to shocks and to maintain monetary and fiscal stability across the union.
Reforms are aimed at:
- enhancing the ability to absorb climate-related and economic shocks;
- improving mechanisms for macroeconomic stabilization given low business cycle synchronization;
- preserving the stability of the union while implementing shock-responsive policies.

Authors: Christina Kolerus, Aleksandra Zdzienicka, Ermal Hitaj, Douglas J Shapiro
Date: October 22, 2013
Series: Departmental Paper No. 2013/007
Issue: 007
Volume: 2013
Pages: 41
DOI: https://doi.org/10.5089/9781484341186.087
ISBN: 9781484341186
ISSN: 2616-5333
Subjects: Business cycles, Debt sustainability, Debt sustainability analysis, Economic growth, Economic integration, External debt, Monetary unions, Public debt
Keywords: business cycle, Business cycles, current account, Debt sustainability, Debt sustainability analysis, DP, DPPP, excess reserves, exchange rate, exports to Mali, financial market, Global, Monetary unions, trade elasticity, WAEMU country, WAEMU government securities market, West Africa

Departmental Papers 2013, 007 — Christina Kolerus; Aleksandra Zdzienicka; Ermal Hitaj; Douglas J Shapiro (accessed 9/16/2026).

Responding to Shocks and Maintaining Stability in the WAEMU
- Responding to Shocks and Maintaining Stability in the WAEMU (Markdown version)
- Responding to Shocks and Maintaining Stability in the WAEMU (PDF)