Date of Award
5-1-2024
Degree Name
Doctor of Philosophy
Department
Economics
First Advisor
Gilbert, Scott
Abstract
It is now reasonably undebatable that monetary and fiscal policies have real effects on monetary union in WAMZ. What seems to prevent the meeting of convergence criteria that was set by the West African Monetary Zone (WAMZ), a counterpart of the European Monetary Union (EMU)has been explored. Consequently, this study examines the economic effect of monetary union in the West African Monetary Zone (WAMZ). This research examines the economic convergence criteria and obstacles to achieving them for the six West African economies of Nigeria, The Gambia, Guinea, Sierraleone, Ghana, and Liberia. The study examines the exchange and inflation rates convergence and discovers no evidence of inflation convergence and some support for exchange rate convergence. The study uses panel and time series data for a 63-year period from 1960 -2022. This study is unique because of renewed interest internationally in economies for monetary integration following the success of EMU, need to examine existing policies and suggest better and common economic and financial policies to promote development, uses an updated data and contributes to the literature on monetary integration in West Africa through adding value to the previous studies. The study examined the pre-WAMZ and post WAMZ periods and discovered variations in growth rates. Furthermore, this study uses OLS regression, fixed effect to correct for endogeneity and exogeneity, Granger causality test, Cointegration and Vector Error Correction Model (VECM) for empirical analysis. Our results reveal weak policy co-ordination in all WAMZ countries, high inflation, high fiscal deficit e.t.c during the period and these contribute to non-compliance in meeting primary and secondary convergence criteria. WAMZ have not realized some of the objectives of integration into a monetary union because of trade barriers, unstable exchange rate and limitations on intra-regional trade in ECOWAS. Additionally, the results corroborate the assertion that exchange rates do not influence intra-WAMZ exports and should not be an instrument of bilateral stimulation but can be useful for balance of payment adjustment. There is a need for fiscal integration before the introduction of the single currency (ECO) after satisfying the secondary and primary criteria. This paper argues for a need for convergence of core macroeconomic instruments of monetary, fiscal and exchange rate policies to be attained before the achievement of common monetary and economic union for the West African States. This paper recommends formation of currency union, more infrastructure development, fiscal discipline and strengthening of fiscal, monetary and exchange rate policies.Keywords: Exchange rate, fiscal policy, monetary policy, fiscal deficit, WAMZ, EMU
Access
This dissertation is Open Access and may be downloaded by anyone.