Effect of the Money Mass on the Macroeconomic Performance of the PAZF: Experience of CEMAC Countries

International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue X, October 2020 | ISSN 2454–6186

Effect of the Money Mass on the Macroeconomic Performance of the PAZF: Experience of CEMAC Countries

 Ulrich Vianney Elisée KAGUENDO

Dschang School of Economics And Management in the University of Dschang
Researcher-Assistant at the Laboratoire de Recherche en Economie Fondamentale et Appliquée (LAREFA).

Abstract: This study aims to analyze the effect of monetary mass on the macroeconomic performance in the countries of the Economic and Monetary Community of the States of Central Africa over the period from 1991 to 2016. We propose an econometric panel model applied to data from secondary sources in the 6 countries of the CEMAC “World development Indicator” area (WDI, 2017). First, we perform the preliminary tests (unit root tests, homogeneity test) and estimate the parameters of the model by the Generalized Method of Moment (GMM) in a system. Specifically, four results major emerge from our work. First, the rate of growth of the money mass has a statistically significant impact on the rate of economic growth in the sub region. Second, the growth of money mass has a significantly positive influence on the level of inflation in CEMAC countries. Third, money mass has a positive effect on employment. Fourth, domestic investment is the engine of economic growth for countries in the sub region. So monetary policy is not neutral in the CEMAC zone.

Keywords: Money Mass, Macroeconomic Performance, CEMAC, GMM.

Code JEL: E31, E32, E52, B22, C13, O55.

I. INTRODUCTION

Less than ten years after the economic and financial crisis of 2007, CEMAC is experiencing the particularly destabilizing effects of a new crisis, linked to the collapse of commodity prices. The fall in crude oil prices from an average of US$104.1 per barrel in 2013 to US$50.9 per barrel in 2015 has disrupted the macroeconomic balances of the member states of the Union, five of which are net exporters and highly dependent on budget revenues (FREF-CEMAC, 2017) . As a result, this fall simultaneously worsened growth prospects in the short and medium term, causing an accentuation of national and regional balance of payments deficits and a collapse of foreign exchange reserves.
In this context, growth slowed in 2016 in all CEMAC countries due to the polarization of their economies based

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