Currency Union in the East African Community. A fractional integration Approach
Authors
Luis A. Gil-Alaña
Héctor Cárcel
Godfrey Madigu
Type
Book chapters
Journal
Springer
Date
01-10-2015
Abstract

This study examines the inflation rates from the five countries that belong to the East African Community and which recently signed a protocol outlining their plans for launching a monetary union within ten years. The aim is to examine the persistence in the inflation levels. As it is argued by the literature regarding monetary unions, countries hoping to form a union should present similar inflation patterns. Our study shows that that the countries present non-mean reversion, confirming that shocks will not recover in the long run. Moreover, fractional cointegration relationships are found between all countries with the exception of Tanzania.  

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Springer's book “Economic Integration, Currency Unions and Sustainable and inclusive growth in East Africa” part of the “Advances in African Economics, Social and Political Development" series.