Ebere Ume Kalu, Chinwe Okoyeuzu, Anthony A. Igwe, Hillary Chijindu Ezeaku and Wilfred I. Ukpere

DOI: https://doi.org/10.6000/1929-7092.2019.08.136

Published: 31 December 2019

Abstract: We analyzed money growth and inflation between 1967 and 2015 for 6 and 8 member countries of West African Monetary Zone and the West African Economic Monetary Union respectively, using Panel data techniques. In our main specification, the regression result shows that a positively significant relationship exists between money growth and the rate of inflation in the West African Monetary Zone. There is an indication that 1% change in broad money growth produces a 28% increase in inflation rate. In the case of WEAMU, a negative and significant relationship was found between broad money growth and inflation showing that a 1% change in broad money supply produces about 9% decline in inflation rate. While WAMZ takes to monetarism, UEMOA takes to Keynesianism. Our findings provide strong supports for more of central control and extensive use of fiscal policy in WAEMU and more active role of monetary variables in directing and influencing economic decisions in the WAMZ for economic sustainability.

Keywords: Inflation, Money Growth, WAEMU, WAMZ, Panel Data, Fixed Effect, Random Effect.

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