Analysis of Wamz’s Economic Growth and Monetary Policy Using the Markov Switching Approach

Jonathan Olusegun Famoroti and Omolade Adeleke
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Jonathan Olusegun Famoroti: University of Kwazulu Natal, College of Law and Management Studies
Omolade Adeleke: University of Kwazulu Natal, College of Law and Management Studies

International Journal of Research and Innovation in Social Science, 2023, vol. 7, issue 4, 142-156

Abstract: This study investigates the impact of monetary policy shocks in two regimes of the business cycles (contractionary and expansion regimes) in 4 countries in the West African monetary zone (WAMZ). It employs the Markov switching model, using quarterly data for the period 1980Q1 to 2020Q4. Our findings show that the countries have common business cycles. In addition, the study offered enough evidence that the significant effects of the monetary instruments are significantly more potent in contractionary than expansionary regimes. Furthermore, on the aggregate, the zone appears to have an average business cycle ranging from 9.8 to 32.3 quarters, varying from country to country and comparatively shorter than the industrial countries. Hence, the designing of policies by the monetary authorities in this region should be tailored to shorten the duration of the contractionary period and must be meticulously formulated to avert the negative consequences of strict contractionary policy and ditto to expansionary policy.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:bcp:journl:v:7:y:2023:i:4:p:142-156

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