Effects of common currency area on trade and income in Central African countries

With the birth of the European Monetary Union, the interest in economic and monetary unions has increased. As matter of fact, as a result of seeing the benefits of this union, thoughts on the establishment of new currency union areas have multiplied. Monetary unions cause member countries not to implement their own monetary policies and not to use the exchange rate as a tool for macroeconomic adjustments. On the other hand, it encourages trade and openness by reducing the cost of international transactions. The aim of this study is to examine the trade and growth effects of CEEAC countries after they join CEMAC by examining the common currency area in Central African Countries. For this purpose, trade gravity model and growth equation model were used. The obtained findings show that the monetary union increases the trade within the union but will negatively affect the growth.