Macroeconomic Fluctuations in Sub-Saharan Africa

IMF Working Papers, July 1, 1997

Source details

The sources of macroeconomic fluctuations in sub–Saharan African are examined by comparing the CFA franc countries with the non–CFA franc countries.
External shocks, especially terms of trade shocks, appear to have a greater influence on fluctuations of output and the real exchange rate in CFA franc countries.
This result does not appear to be associated with differences in the economic structure but may reflect the fixed exchange rate regime, which does not (partially) buffer these countries from external shocks.
Macroeconomic fluctuations in non–CFA franc countries are similar to those in other developing countries, particularly in Latin America.

External shocks (notably terms of trade shocks) have a larger impact on output fluctuations in CFA franc countries.
Real exchange rate fluctuations in CFA franc countries are more influenced by external shocks than in non–CFA franc countries.
Differences in economic structure do not account for the stronger influence of external shocks in CFA franc countries.
The fixed exchange rate regime in CFA franc countries likely reduces buffering against external shocks.
Non–CFA franc countries in sub–Saharan Africa show fluctuation patterns comparable to other developing regions, particularly Latin America.

Subject: Exchange rate arrangements, Foreign exchange, Inflation, International trade, Prices, Real exchange rates, Terms of trade, Trade balance
Keywords: CFA franc, CFA franc country, exchange arrangements, Exchange rate arrangements, Inflation, Macroeconomic fluctuations, Non-CFA Franc country, open economy, Real exchange rates, Sub-Saharan Africa, sub-Saharan Africa country, Terms of trade, terms of trade shock, Trade balance, WP

Macroeconomic Fluctuatins in Sub-Saharan Africa - WP/97/82
- Macroeconomic Fluctuatins in Sub-Saharan Africa - WP/97/82 (Markdown version)
- Macroeconomic Fluctuatins in Sub-Saharan Africa - WP/97/82 (PDF)