| The purpose of this study was to evaluate the effect of a single currency policy for Kenya, Tanzania and Uganda on the volume, value and direction of trade and the distribution of welfare changes between these countries. A single-commodity (maize), multi-country spatial equilibrium model was used to evaluate the possible trade and welfare effects of the proposed single currency. Simulation results show higher levels of aggregate regional production with increased production in Uganda and decreased production in Kenya and Tanzania. The results also show increased aggregate trade in the region, the value of exports from Uganda to Kenya increased by 12%, while export values from Tanzania to Kenya decreased by 25%. The results indicate that a single currency will result in a regional net welfare gain however the distribution of these gains will not be uniform across the region. |
