MACROECONOMIC SHOCKS AND TRADE-FLOWS WITHIN SUB-SAHARAN AFRICA - IMPLICATIONS FOR OPTIMUM CURRENCY ARRANGEMENTS

Africa has more countries than any other continent, and hence the larg est number of potential monetary and exchange rate arrangements. This paper looks at whether the existing highly fractured monetary arrangem ents in Sub-Saharan Africa correspond to what might be expected from t he theory of optimum currency areas. This is done by analysing both th e size and correlation of real disturbances across countries and the l evel of intra-regional trade. The results indicate little evidence tha t Sub-Saharan African countries would benefit in the near future from larger currency unions.