On the Optimality of the Maghrebian Area: An Analysis of the Macroeconomic Shocks

Abstract

This paper studies the possibility of a monetary union in the Maghreb using the traditional criteria of the theory of the optimal currency areas. First, we examined the degree of shocks correlation in order to see whether the shocks affecting Maghrebian countries are symmetrical or asymmetrical. The analysis of the growth rates reveals dispersions and that of the inflation rates shows that essential efforts remain to be provided regarding monetary cooperation. By developing a structural VAR model based on the methodology of Blanchard and Quah (1989), we show that the macroeconomic shocks are rather heterogeneous in this area supporting the assumption of a relatively high dispersion of the economic growth rates. However, our results reveal a relative symmetry of the supply shocks between Morocco and Tunisia.