The Dynamics of Monetary Policy and Output Growth in Economic Community of West African States (ECOWAS)


1 Department of Economics, Ekiti State University, Ekiti State, Nigeria

2 Department of Economics, Federal University Oye-Ekiti, Ekiti State, Nigeria


This study examined the dynamics of monetary policy and output growth in the Economic Community of West African States between 1980(Q1) and 2019(Q4). Time-series data spanning was utilized from 1980 (Q1) to 2019 (Q4), which was sourced from the World Bank and International Monetary Fund databases. This study uses the panel co-integration ARDL approach and panel vector autoregressive model estimation techniques. The pooled data results for ECOWAS countries confirmed that all interest variables were stationary after the first difference. The study's findings revealed a long-run relationship between output growth and monetary policy variables in Anglophone and Francophone ECOWAS countries. The results of both the long-run and short-run models of the ARDL regression estimate showed that interest rate and money supply growth were significant determinants of output growth in ECOWAS Countries. In contrast, the exchange rate is an insignificant determinant of output growth in ECOWAS countries. In addition, the study observed that the exchange rate has a negative and significant impact on output growth in Anglophone ECOWAS countries, while on the contrary exchange rate has a positive and significant effect on output growth in Francophone ECOWAS countries. Based on the findings of this study, there is a need for ECOWAS countries to work towards achieving an effective real exchange rate that will help to increase output growth.