author={Loïc Batté and Agnès Bénassy-Quéré and Benjamin Carton and Gilles Dufrénot},
title={Term of Trade Shocks in a Monetary Union: an Application to West-Africa},
type={Working Papers},
abstract={We propose a two-country DSGE model of the Dutch disease in a monetary union, calibrated on Nigeria and WAEMU. Three monetary regimes are successively studied at the union level: a flexible exchange rate with constant money supply, a flexible exchange rate with an accommodating monetary policy, and a fixed exchange rate regime. We find that, in the face of oil shocks, the most stabilizing regime for Nigeria is a fixed money supply whereas it is a fixed exchange rate for WAEMU. However, the introduction of an oil stabilization fund can reduce the disagreement on the common policy rule. Furthermore, the two zones may agree on a fixed money-supply rule in the face of both oil and agricultural price shocks.},
keywords={Dutch disease ; DSGE ; Monetary union ; Optimal monetary policy}