The West African Economic and Monetary Union and the African Growth and Opportunity Act: A computable general equilibrium approach.

摘要

Scope and method of study. The West African Economic and Monetary Union (WAEMU) countries, like the other Sub-Saharan Africa countries, face the pressing challenge of generating sustained economic growth. Results from several theoretical studies showed that economic growth in the WAEMU countries is low due to high population growth, low schooling, political instability, ethnic divisions, low degree of openness to trade, poor financial intermediary development, poor policy choices, low foreign direct investment, high government deficit, and lack of infrastructure.;To encourage trade and investment in the Sub-Saharan Africa, the United States passed the African Growth and Opportunity Act (AGOA). The law was designed to reduce trade barriers, negotiate free trade areas, strengthen and expand the private sector, and encourage increased trade and investment between the United States and Sub-Saharan Africa, hence the WAEMU.;The purpose of this study is to develop a CGE model for the WAEMU economy to determine the economic impacts of four policy options: (1) Free trade; (2) increase in foreign capital inflow; (3) Devaluation; and (4) Indirect tax cut.;Findings and conclusion. The sectoral effects of simulating these policies are considerably greater than the effects from no policies changes: total output and trade balance improve substantially. The economic impacts are increase in the institutions revenues, total saving, and total consumption. Real GDP, real investment, and demand for money improve greatly. The economic impacts of simulating a policy mix under a regime of fixed exchange rate and a regime of flexible exchange system are mixed.