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Shocks effects of inflation, money supply, and exchange rate on the West African Monetary Zone (WAMZ): Asymmetric SVAR modelling

Author

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  • Muhammad Ilyas
  • Liying Song
  • Mukhtar Danladi Galadima
  • Muhammad Noshab Hussain
  • Abdul Sattar

Abstract

This paper has investigated the shocks effects of inflation, money supply, and exchange rate on the economies of the West African Monetary Zone (WAMZ) from 1987 to 2019 using the Kapetanios-Shin-Snell nonlinear cointegration test, Kilian-Vigfusson asymmetric tests, and Hatemi technique that allows the estimation of Asymmetric Structural Vector Autoregressive (ASVAR) model. The findings revealed that in all the countries, the shocks effects of inflation, money supply, and exchange rate are asymmetric except in Guinea and inflation in Liberia. Furthermore, for Gambia and Nigeria, only money supply is impacting the economies, while for Ghana, Guinea, and Liberia, none of the variables is impacting the economies but for Serra Leone, money supply and exchange rate are impacting its economy. Moreover, all the countries have common sources of shocks emanating from monetary and exchange rate policies except Gambia, which is monetary policy only. Therefore, the paper recommends the members, especially Ghana, Guinea, and Liberia, a solemn effort on appropriate monetary and exchange rate policies to boost their economies. Also, since almost all the countries have common sources of shocks emanating from monetary and exchange rate policies, they can embark into the monetary integration.

Suggested Citation

  • Muhammad Ilyas & Liying Song & Mukhtar Danladi Galadima & Muhammad Noshab Hussain & Abdul Sattar, 2022. "Shocks effects of inflation, money supply, and exchange rate on the West African Monetary Zone (WAMZ): Asymmetric SVAR modelling," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 31(2), pages 255-276, February.
    • Handle: RePEc:taf:jitecd:v:31:y:2022:i:2:p:255-276
    DOI: 10.1080/09638199.2021.1965191
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    Cited by:

    1. Eugene Msizi Buthelezi, 2023. "Impact of Money Supply in Different States of Inflation and Economic Growth in South Africa," Economies, MDPI, vol. 11(2), pages 1-22, February.

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