Currency Devaluation as a Source of Growth in Africa: A Synthetic Control Approach

This study examines the impact of the 1994 IMF-supported CFA franc devaluation on GDP per capita in the CFA-franc zone using the augmented synthetic control methodology. With the exception of Mali, there is no statistical evidence that GDP per capita levels rose relative to what they would have been in the absence of the IMF-supported devaluation. Three countries record statistically significant GDP per capita levels below the counterfactual following the devaluation, though these countries experienced a deterioration of their national institutional environment or were affected by external factors that offset any potential gains from the devaluation.