Commodity Shocks and External Currency Stability: An Empirical Evidence from CEMAC

Chocs sur les produits de base et stabilité externe de la monnaie: une évidence empirique en CEMAC

Fabien Clive Ntonga Efoua () and Etienne Inédit Blaise Tsomb Tsomb ()
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Fabien Clive Ntonga Efoua: FSEG - Faculté de Sciences Econonomiques et de Gestion - Yaoundé II - Université de Yaoundé II, CEDIMES - CEDIMES - Centre d'Etudes sur le Développement International et les Mouvements Economiques et Sociaux , ERMASMOP-Afrique - 'Equipe de recherche en marketing, stratégie et management des organisations publique-Afrique, CEREG - University of Yaoundé 2
Etienne Inédit Blaise Tsomb Tsomb: Université de Douala

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Abstract: The goal of this paper is to highlight the mechanisms through which shocks on commodities can affect the external stability of the CFA issued by the BEAC (apprehended through the External Coverage Rate of the currency - ECR). The choice of variables, namely: the ECR, the profits from the exploitation of natural resources on the one hand, the external public debt and inflation (control variables) on the other is made with reference to the literature, the financial history (crisis of the 1980s and financial turbulences of the years 2015-2019) and the current events (the Great Lockdown and the Russia-Ukraine war). The econometric strategy consists of a panel-VAR specification on which various diagnostic tests were applied (stationarity, number of lags, stability of the model and robustness). Our results show that shocks on commodities (including those on control variables) weaken the foreign exchange reserves dynamics in CEMAC. However, they do not compromise the credibility of the BEAC in the short term. Based on this, we make some policy recommendations.

Keywords: Money external stability; Foreign exchange reserves; ECR; CEMAC; Panel-VAR; E5; G01; N1; N2; Stabilité extérieure de la monnaie; Réserves de change; TCE; panel-VAR; Money external stability Foreign exchange reserves ECR CEMAC Panel-VAR Classification JEL : C58 C23 E44 E5 G01 N1 N2; Panel-VAR Classification JEL : C58; C23; E44 (search for similar items in EconPapers)
Date: 2023-10-06
New Economics Papers: this item is included in nep-cis
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Published in Bulletin Economique et Statistiques (BES) - BEAC, 2023, 18 (2), pp.52-79

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