Effects of External Debt on Inflation in the West African Monetary Zone (WAMZ)

Authors

Collins Anosike, Southern Illinois University, USAFollow

Document Type

Article

Abstract

This research examined the effect of external public debt on inflation in the West African Monetary Zone (WAMZ) using annual data from 1960 to 2022. The study selected the six member countries of WAMZ, namely: Gambia, Guinea, Nigeria, Sierra Leone, Liberia, and Ghana, to examine their economic well-being, growth performance, external debt, and inflation over a 63-year period. This study is unique because it examines three periods, namely: pre-WAMZ (1960 to 2000); during WAMZ (2001 to 2022); and the entire period (1960 to 2022), extends previous studies by using updated data, and then shows the long-run positive effect of external public debt on Inflation in WAMZ. The creation of WAMZ and the period during WAMZ changed some of the macroeconomic outcomes of the variables. The outcomes for some variables in the tests and regressions differ across the three periods for the same variable. Our results show a positive and a negative relationship between variables and inflation. The cointegration test results reveal evidence of a stable long-run asymmetric relationship between public debt and inflation. External public debt has a positive relationship with inflation in the three periods examined. The study suggests the need for coordination between central banks and the Ministry of Finance in terms of monetary and fiscal policy, emphasizing fiscal prudence, increased production, and reduced borrowing.

DOI

https://doi.org/10.24073/jga/6/02/03

Recommended Citation

Anosike, Collins (2025) "Effects of External Debt on Inflation in the West African Monetary Zone (WAMZ)," Journal of Global Awareness: Vol. 6: No. 2, Article 3.
DOI: https://doi.org/10.24073/jga/6/02/03
Available at: https://scholar.stjohns.edu/jga/vol6/iss2/3