What is Fuzzy About Clustering in West Africa?

By Mahvash S Qureshi, Charalambos G Tsangarides

March 1, 2006

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Mahvash S Qureshi, and Charalambos G Tsangarides. What is Fuzzy About Clustering in West Africa?, (USA: International Monetary Fund, 2006) accessed December 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Applying techniques of clustering analysis to a set of variables suggested by the convergence criteria and the theory of optimal currency areas, this paper looks for country homogeneities to assess membership in the existing and proposed monetary unions of the broader west African region. Our analysis reveals considerable dissimilarities in the economic characteristics of the countries in west and central Africa. In particular, the West African Monetary Zone (WAMZ) countries do not form a cluster with the West Africa Economic and Monetary Union (WAEMU) countries; and, within the WAMZ, there is a significant lack of homogeneity. Furthermore, when west and central African countries are considered together, we find significant heterogeneities within the CFA franc zone, and some interesting similarities between the Economic and Monetary Community of Central Africa (CEMAC) and WAMZ countries. Overall, our findings raise some questions about the geographical boundaries of several existing and proposed monetary unions.

Subject: Business cycles, Exchange rates, Monetary unions, Real exchange rates, Terms of trade

Keywords: Exchange rate, WAMZ country, WP

Publication Details

Pages:

45
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2006/090
Stock No:

WPIEA2006090
ISBN:

9781451863505
ISSN:

1018-5941

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