Single Currency in the ECOWAS Region: Does it Make Sense?

Abstract

This study investigated empirically the possibility of forming an Optimum Currency Area (OCA) among member countries of Economic Community of West African States (ECOWAS) region. Under OCA, member countries would share a common currency (like, the euro) while foregoing their autonomy with respect to their use of monetary policy instruments. We observed that the countries were good candidates for forming an OCA, given the existence of a long run relationship in their trend (permanent) output component. Hence, the plausibility for forming an OCA.