EUROPEAN JOURNAL OF SUSTAINABLE DEVELOPMENT RESEARCH
Research Article

The Implication of Financial Derivable from Abroad on West African Monetary Zone’s ECO Currency

European Journal of Sustainable Development Research, 2021, 5(1), em0151, https://doi.org/10.21601/ejosdr/9676
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ABSTRACT

This study aims to determine the extent to which the West African Monetary Zone (WAMZ) can fulfill the Expost conditions for achieving convergence. This study, therefore, evaluates the pattern of shock symmetry and convergence in connection to WAMZ’s Pillar III policy strategy. Time series data sourced from the World Bank for the period covering 1970 to 2017 were utilized for this study. Two basic econometric tools such as Impulse Response Function (IRF) and the ADF convergence test were employed to determine whether WAMZ can achieve selected Macroeconomic Convergence Criteria (MCC) in the long-run. From the study, we found that WAMZ is not a full potential candidate for ECO Economic and Monetary Union (EMU) due to the inability of the available results to show overall shock asymmetry in the entire models studied. Also, the study found that WAMZ could attain convergence in its inflation targets, but could not attain convergence in its GDP targets. Thus the results imply that in the long-run, WAMZ does not practically possess the attribute to achieve its MCC. Hence, it is imperative that for the adoption of the ECO currency, WAMZ should design and implement a short-run adjustment method to manage country-wise shocks and implement structural buffers to guard the WAMZ economies against structural shocks. Hence, we recommend that ECO currency be a reserve currency managed by the West African Currency Board (WACB) while the EMU member maintains its domestic currency. WAMZ is basically a quasi EMU.

KEYWORDS

MCC Ex post OCA theory Foreign Derivable from Abroad WAMZ

CITATION (APA)

Amaefule, C., & Ibekwe, M. A. (2021). The Implication of Financial Derivable from Abroad on West African Monetary Zone’s ECO Currency. European Journal of Sustainable Development Research, 5(1), em0151. https://doi.org/10.21601/ejosdr/9676
Harvard
Amaefule, C., and Ibekwe, M. A. (2021). The Implication of Financial Derivable from Abroad on West African Monetary Zone’s ECO Currency. European Journal of Sustainable Development Research, 5(1), em0151. https://doi.org/10.21601/ejosdr/9676
Vancouver
Amaefule C, Ibekwe MA. The Implication of Financial Derivable from Abroad on West African Monetary Zone’s ECO Currency. EUR J SUSTAIN DEV RES. 2021;5(1):em0151. https://doi.org/10.21601/ejosdr/9676
AMA
Amaefule C, Ibekwe MA. The Implication of Financial Derivable from Abroad on West African Monetary Zone’s ECO Currency. EUR J SUSTAIN DEV RES. 2021;5(1), em0151. https://doi.org/10.21601/ejosdr/9676
Chicago
Amaefule, Chukwuemeka, and Manfred A. Ibekwe. "The Implication of Financial Derivable from Abroad on West African Monetary Zone’s ECO Currency". European Journal of Sustainable Development Research 2021 5 no. 1 (2021): em0151. https://doi.org/10.21601/ejosdr/9676
MLA
Amaefule, Chukwuemeka et al. "The Implication of Financial Derivable from Abroad on West African Monetary Zone’s ECO Currency". European Journal of Sustainable Development Research, vol. 5, no. 1, 2021, em0151. https://doi.org/10.21601/ejosdr/9676

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