How Feasible Is the ECO Currency? A Study of ECOWAS Business Cycles Synchronicity

Using a Structural vector auto-regression analysis, this paper attempts to answer the question of the feasibility of a currency union in the Economic community of West African states (ECOWAS). The study focuses on a particular criterion of the theory of optimum currency area (OCA) i.e. the similarity of business cycles. The main results suggest important discrepancies between countries that are already within the WAEMU (CFA Franc) arrangement and countries that have their own arrangement (WAMZ area). In particular, it is possible to distinguish a core and a periphery within the community.