Trade openness and inflation dynamics in ECOWAS countries: An empirical investigation

Frank Darkwah, Daniel Sakyi () and Eric Evans Osei Opoku

The Journal of International Trade & Economic Development, 2024, vol. 33, issue 8, 1577-1599

Abstract: This paper investigates the long-run and short-run relationship between trade openness and inflation for ECOWAS countries for the period 1970–2020. Using alternative openness measures and estimation methods, it was found that there is a significant positive long-run relationship between trade openness and inflation for ECOWAS countries. The implication of this result is that, if ECOWAS countries continue to import consumption products outside the region rather than capital goods that can increase domestic production, it will be very difficult for member countries to meet the convergence criteria, specifically low inflation required for the proposed monetary unification. In the short run, the results show that there is a negative relationship between trade openness and inflation for ECOWAS countries. This result is specific to a determined period and as the economy gets more open, it becomes more exposed to a higher rate of inflation. Therefore, to meet low inflation criteria, member countries should take it as a matter of urgency to fully implement the ECOWAS trade liberalization scheme to improve intra-regional trade. This would reduce excessive dependence on external imports which makes ECOWAS countries vulnerable to international price volatility, currency depreciation and a high rate of inflation.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/09638199.2023.2284758 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jitecd:v:33:y:2024:i:8:p:1577-1599

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RJTE20

DOI: 10.1080/09638199.2023.2284758

Access Statistics for this article

The Journal of International Trade & Economic Development is currently edited by Pasquale Sgro, David E.A. Giles and Charles van Marrewijk

More articles in The Journal of International Trade & Economic Development from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().