https://hdl.handle.net/10419/264210 Fri, 23 Oct 2026 01:14:58 GMT 2026-10-23T01:14:58Z https://hdl.handle.net/10419/339338 Title: Fiscal deficit and inflation dynamics in the WAMZ Authors: Olowofeso, Olorunsola E.; Wadda, Ebrima N.; Adedeji, Kayode E.; Loua, Joachim; Collins, John M. Abstract: The West African Monetary Zone (WAMZ)'s economy has faced persistent fiscal deficits over the years, and this has affected other macroeconomic indicators like inflation. This study empirically examines the effect of fiscal deficit on inflation dynamics in the WAMZ. It employs the Panel Smooth Threshold Regression model, using annual data spanning from 2002 to 2023. The findings revealed a nonlinear relationship between inflation and fiscal deficit in the WAMZ, with two distinct regimes. These regimes comprise a linear part and a nonlinear part, with the fiscal deficit as the threshold variable alongside key inflation drivers. The estimation of the model coefficients smoothly switches from linear to nonlinear forms, with an optimal fiscal deficit threshold of 6.16 percent per annum in the Zone. Below this threshold, the fiscal deficit in WAMZ member states mitigates significant welfare losses. However, above this threshold, its coefficient becomes positive and statistically significant at the 5 percent level of significance, suggesting that exceeding this level of deficit funding would negatively affect the inflation rate, leading to potential welfare losses due to the inflation tax. The study recommends a fiscal strategy based on a threshold of 6.16 percent for fiscal deficit in the Zone to prevent the adverse effects of inflation. Additionally, the study recommends fiscal consolidation, which will help to rein in external imbalances and contain the increase in debt related to currency depreciation. Wed, 01 Jan 2025 00:00:00 GMT https://hdl.handle.net/10419/339338 2025-01-01T00:00:00Z https://hdl.handle.net/10419/339313 Title: Exchange rate pass-through to inflation in the WAMZ: Are there asymmetric threshold effects? Authors: Olowofeso, Olorunsola E.; Wadda, Ebrima N.; Adeleke, Adegoke I.; Cham, Yayah; Yengbe, Joseph R.; Kanu, Tapia M. Abstract: This study provides country-specific empirical evidence on the optimal exchange rate passthrough to inflation in the WAMZ for the 1980-2023 period. Although there is a large empirical literature on this subject, previous studies have primarily focused on linear approaches to determining optimal exchange rate pass-through, where inflation is presumed to react similarly to both small and large changes in the exchange rates. This paper contributes to the policy debate by endogenously determining the individual WAMZ countries' threshold effects of exchange rate pass-through to inflation at different episodes. The results from the study show optimal nominal exchange rate pass-through to inflation of 15.5 percent for The Gambia, 23.8 percent for Ghana, 18.3 percent for Guinea, 11.2 percent for Liberia, 18.5 percent for Nigeria, and 19.6 percent for Sierra Leone. Moreover, in most WAMZ countries, the nominal exchange rate pass-through is negative and statistically insignificant during periods of currency appreciation (lower regime), whereas it becomes positive and significant during episodes of currency depreciation (upper regime), indicating a stronger inflationary impact when currencies weaken. This study provides strong empirical evidence of incomplete and asymmetric pass-through of the exchange rate to inflation, as ERPT is high during currency depreciation and low during appreciation. Hence, ignoring asymmetric threshold effects of exchange rate movements on inflation may lead to inappropriate policy prescriptions and inferences. Notably, this result aligns with the ECOWAS exchange rate variability convergence criteria (±10 percent). Thus, monetary authorities within the zone are encouraged to continue pursuing appropriate monetary policy measures that will lower exchange rate variability below the desirable threshold levels, thereby helping to control inflation. Wed, 01 Jan 2025 00:00:00 GMT https://hdl.handle.net/10419/339313 2025-01-01T00:00:00Z https://hdl.handle.net/10419/339339 Title: The multidimensional effects of infrastructural development on intra-regional trade in the WAMZ Authors: Olowofeso, Olorunsola E.; Wadda, Ebrima N.; Adeleke, Adegoke I.; Yengbe, Joseph R.; Cham, Yaya; Kanu, Tapia M. Abstract: This study examines the impact of infrastructure development on intra-WAMZ trade, with a comparative assessment of the effects of different infrastructure categories on trade flows among member states. A modified gravity model, employing the Poisson pseudo-maximum likelihood (PPML) estimation technique, is utilised to ensure reliable results and achieve the study's objectives. The study covers all six member states of the Zone over the period 2005 to 2023. Findings reveal that while overall infrastructure development exhibits a positive relationship with intra-WAMZ trade, the effect is statistically insignificant. Similar outcomes are observed for energy and information technology infrastructure. Conversely, water and sanitation infrastructure demonstrates a statistically significant positive impact on trade within the Zone, whereas transport infrastructure exerts a negative and significant effect. These outcomes underscore persistent infrastructure gaps and highlight the need to improve infrastructure quality across the region. The significant positive coefficient for water and sanitation infrastructure suggests opportunities to enhance trade flows, particularly through addressing sanitary and phytosanitary (SPS) constraints. Accordingly, the study recommends intensified regional collaboration to overcome structural and policy barriers and improve infrastructure quality. Such efforts should aim to promote economic diversification, strengthen trade complementarities, and foster regional value chains, thereby advancing deeper integration, enhancing trade flows, and supporting sustainable economic growth. Wed, 01 Jan 2025 00:00:00 GMT https://hdl.handle.net/10419/339339 2025-01-01T00:00:00Z https://hdl.handle.net/10419/339340 Title: The impact of climate change on the real sector in the West African Monetary Zone Authors: Olowofeso, Olorunsola E.; Wadda, Ebrima N.; Abude, Francis Mawuli; Adedeji, Kayode Ezekiel; Collins, John M.; Loua, Joachim Abstract: Climate change poses severe risks to developing economies, particularly those in the West African Monetary Zone (WAMZ), where agriculture and climate-sensitive sectors drive growth. Rising temperatures, erratic rainfall, and extreme weather events increasingly disrupt output, fuel inflation, and destabilise exchange rates, undermining both national resilience and regional integration under the ECOWAS single currency agenda. However, empirical evidence on the magnitude and channels of these impacts in the WAMZ remains limited. This study examines the relationship between climate change and real sector performance in the WAMZ Member States using a balanced annual panel dataset from 1974-2024. Temperature is employed as a proxy for climate shocks, alongside key macroeconomic variables: real GDP growth, inflation (GDP deflator), and exchange rates. A Panel Autoregressive Distributed Lag (Panel-ARDL) technique is applied to capture both short- and long-run dynamics. The results suggest that a 1 percent increase in temperature is associated with a 28.8 percent and 0.68 percent increase price index and real GDP growth rate, respectively in the long-run, underscoring climate change's non-trivial macroeconomic effects. Climate change policy analysis indicates that existing climate strategies across WAMZ Member States remain fragmented, weakly coordinated, and insufficiently integrated into macroeconomic frameworks. The study argues for harmonised regional climate policies, climate-smart investment, and resilience-oriented macroeconomic planning aligned with the Sustainable Development Goals. By providing the first panel-based evidence of climate change's macroeconomic effects in the WAMZ, this study highlights the urgent need for coordinated regional responses to safeguard sustainable growth and the monetary integration agenda. Wed, 01 Jan 2025 00:00:00 GMT https://hdl.handle.net/10419/339340 2025-01-01T00:00:00Z