Article
The euro and the cfa franc: Evidence of sectoral trade effects
Open Economies Review
(2019)
Abstract
This paper estimates a gravity model of trade to evaluate the trade effects of the Euro on sectoral trade within the Eurozone (EZ), the CFA Franc Zone (CFA) and between the EZ and the CFA, when CFA countries acquired fixed rates against the non-francophone EZ members. The formation of the EZ provides a quasi-natural experiment to estimate the effects on trade of fixed exchange rates, since the change in exchange rate regime for CFA countries with all EZ countries but France was not trade related. This is tested using sectoral trade data for 175 countries over the period 1995–2016 and validated using a longer time period starting in the seventies. The main departure from Frankel (2008), is the estimation of a structural gravity model using sectoral trade and bilateral-sectoral fixed effects as well as controls for multilateral resistance, namely time varying country-sector fixed-effects for exporters and importers, in aPPML framework.
Keywords
- CFA Frank,
- Gravity model,
- sectoral trade,
- African trade,
- trade agreements,
- PPML
Disciplines
Publication Date
2019
Citation Information
Inmaculada Martinez-Zarzoso. "The euro and the cfa franc: Evidence of sectoral trade effects" Open Economies Review Vol. 30 Iss. 3 (2019) p. 483 - 505 Available at: http://works.bepress.com/inma_martinez_zarzoso/41/