Effect of Currency Depreciation on the Economy of West African Monetary Zone (WAMZ) (2000 – 2017)

ABSTRACT

This study examined the impact of currency depreciation on the economy of the countries of the West African Monetary Zone (WAMZ). This was done through the use of a sample of six member countries including: Nigeria, Sierra Leone, Liberia, Ghana, Gambia and Guinea. The scope of the study included the period 2000 to 2017. The analysis was carried out using the Seemingly Unrelated Regression method of estimation. The results revealed that currency depreciation has a negative and non-significant impact on economic growth in Ghana, Gambia, Guinea, Nigeria and Sierra Leone. On the other hand, currency depreciation was found to have a negative and significant impact on economic growth in Liberia. The result also revealed that currency depreciation has a positive and significant impact on unemployment in Nigeria and Sierra Leone, and a negative and non-significant impact on unemployment in Gambia and Liberia. On the other hand, currency depreciation was found to have a negative and significant impact on unemployment in Ghana and Guinea. Finally, the result of the study revealed that currency depreciation has a positive and significant impact on inflation in Nigeria, Sierra Leone, Gambia and Guinea, a negative and significant impact on inflation in Liberia, and a negative and non-significant impact on inflation in Ghana. Based on the results, the study recommended that: the Central Banks of Nigeria and Sierra Leone should also intervene in the Liberian foreign exchange market to prevent the continued depreciation of the exchange rate of the Naira and Leone; the Central Banks of Liberia and Ghana should allow the exchange rate of the Liberian Dollar and Ghanaian Cedi to depreciate; monetary authorities of Guinea and Gambia should allow the exchange rate of their currencies to depreciate.

TABLE OF CONTENT

Title page

Certification

Dedication

Acknowledgment

Abstract

Chapter One: Introduction

1.1  Background of the study

1.2  Statement of the problem

1.3  Objective of the study

1.4  Research hypothesis

1.5  Significance of the study

1.6  Scope of the study

1.7  Definition of terms

Chapter Two: Theoretical framework and literature review

2.1.   Theoretical framework

2.1.2  The traditional school approach

2.1.3  The IS-LM approach

2.1.4  The purchasing power parity approach

2.1.5  The trade theory approach

2.2    Literature review

2.3    Conceptual issues

2.4    Exchange rate movement in theperiod of economic uncertainty

Chapter Three: Research methodology and model specification.

3.1  Sources of data

3.2  Research population and samplesize

3.3  Method of estimation

3.4  Model specification

Chapter Four: Presentation of result and discussion

4.1       Presentation and analysis

4.2       Test of hypothesis

4.3       Discussion of findings

Chapter five; summary, conclusion and recommendation

5.1       Summary of findings

5.2       Conclusion

5.3       Policy recommendations

References