Designing fiscal institutions for an East African Monetary Union

Abstract:

This paper discusses the fundamental macroeconomics of monetary union and their implications for the design of the fiscal architecture for monetary union in East Africa. In doing so we highlight some of the weaknesses in the design and operation of the Eurozone, the only direct contemporary comparator to the proposed East African Monetary Union. Aspects of the incomplete fiscal architecture of the Eurozone are reflected in the Protocol. The paper makes recommendations on the design of subsequent and supporting enabling legislation.