This paper separately assesses the impact of the franc CFA’s fixed parity with the euro on the real GDP per capita of the WAEMUand CAEMCeconomicandmonetaryareas. Using data collected from eight and six countries respectively, and over the period 1989–2019, we usecounterfactual estimation methods to estimate the average treatment effect of the currency peg on GDP per capita in two economic zones. This involves estimating the average treatment effect on the treated by directly imputing counterfactual outcomes for treated observations. Our results reveal contrasting average effects in the two zones. Compared to the counterfactual outcome, our results show contrasting effects of the reform on income in the two zones. While the reform significantly increased GDP per capita in the CAEMC zone, it had no effect on GDP per capita in the WAEMU zone compared to what would have happened otherwise. Analyzing the effects of this reform on income in terms of time trajectories also highlights converging situations between the two zones. In the long term, the average impact of reforms tends to be negatively reinforced.

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Keywords

Counterfactual estimators, Franc CFA, Currency pegging, Income, WAEMU and CAEMC