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Monetary union for the development process in the East African community: business cycle synchronization approach

Ahmed Sheikh, Kamaludin and Nurul Azam, Mohammad and Rabby, Talukder Golam and Alam, Gazi Mahabubul and Khan, Issa (2011) Monetary union for the development process in the East African community: business cycle synchronization approach. African Journal of Business Management, 5 (17). pp. 7632-41. ISSN 1993-8233

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This paper empirically examines the suitability of monetary union in East African community members namely, Burundi, Kenya, Rwanda, Tanzania and Uganda, on the basis of business cycle synchronization. This research considers annual GDP (gross domestic product) data from IMF (international monetary fund) for the period of 1980 to 2010. In order to extract the business cycles and trends, the study uses HP (Hodrick-Prescott) and the BP (band pass) filters. After identifying the cycles and trends of the business cycle, the study considers cross country correlation analysis and analysis of variance technique to examine whether EAC (East African community) countries are characterized by synchronized business cycles or not. The results show that four EAC countries (Burundi, Kenya, Tanzania and Uganda) among five countries are having similar pattern of business cycle and trend from the last ten years of the formation of the EAC. The research concludes that these countries, except Rwanda, do not differ significantly in transitory or cycle components but do differ in permanent components especially in growth trend.

Item Type: Article (Journal)
Additional Information: 6642/7397
Uncontrolled Keywords: Business cycle synchronization, optimum currency area, East African community, monetary union, development.
Subjects: H Social Sciences > HG Finance
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): Kulliyyah of Education
Depositing User: Prof. Dr. Gazi Mahabubul Alam
Date Deposited: 15 Nov 2011 14:56
Last Modified: 07 May 2012 22:21
URI: http://irep.iium.edu.my/id/eprint/7397

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