TY - JOUR
T1 - The Portuguese escudo area in Africa and its lessons for monetary unions
AU - Mata, Maria Eugénia
AU - Nunes, Luís Catela
AU - Roldão, Mário
N1 - Funding agency#
Banco de Portugal#
PY - 2021/12
Y1 - 2021/12
N2 - The beginnings of the Portuguese Escudo Monetary Zone (EMZ) in 1961, to promote the economic integration of Portugal and its empire, coincide in time with Mundell’s seminal paper about optimum currency areas. If non-optimality was the cause of the EMZ’s demise. This would suggest that monetary unions are fragile achievements, with little prospect for survival. The EMZ turned out to be a short-lived experiment, with Angola and Mozambique building up large cumulative deficit positions offset by the sizeable cumulative surpluses of the mainland. A cobweb model using monthly observations for macroeconomic variables of these two territories describes a time divergent process caused by structural imbalances, as well as by the loan granting system. The EMZ was not an optimum currency area and was not sustainable in the long run. This is an historical experiment that is not without interest for the study of other monetary areas.
AB - The beginnings of the Portuguese Escudo Monetary Zone (EMZ) in 1961, to promote the economic integration of Portugal and its empire, coincide in time with Mundell’s seminal paper about optimum currency areas. If non-optimality was the cause of the EMZ’s demise. This would suggest that monetary unions are fragile achievements, with little prospect for survival. The EMZ turned out to be a short-lived experiment, with Angola and Mozambique building up large cumulative deficit positions offset by the sizeable cumulative surpluses of the mainland. A cobweb model using monthly observations for macroeconomic variables of these two territories describes a time divergent process caused by structural imbalances, as well as by the loan granting system. The EMZ was not an optimum currency area and was not sustainable in the long run. This is an historical experiment that is not without interest for the study of other monetary areas.
KW - Optimal currency areas
KW - partners’ indebtedness
KW - Portuguese colonial empire
KW - sustainability of monetary unions
KW - the escudo monetary zone
UR - http://www.scopus.com/inward/record.url?scp=85104951093&partnerID=8YFLogxK
U2 - 10.1080/20780389.2021.1890579
DO - 10.1080/20780389.2021.1890579
M3 - Article
AN - SCOPUS:85104951093
SN - 2078-0389
VL - 36
SP - 392
EP - 421
JO - Economic History of Developing Regions
JF - Economic History of Developing Regions
IS - 3
ER -