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REAL Exchange Rate Misalignment and Economic Performance of WEST AFRICAN MONETARY ZONE:Implications for macroeconomic unionisation

Raji, Rahman Olanrewaju (2012): REAL Exchange Rate Misalignment and Economic Performance of WEST AFRICAN MONETARY ZONE:Implications for macroeconomic unionisation.

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Abstract

The study assessed the real exchange rate misalignment and economic performance of WAMZ economies to determine its implications on economic unionization. The study uses Generalised Method of Moment of Dynamic Panel Estimation Method and supported with Cross Country Correlation Approach which comprises Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone covering the period from 2000 commencement of the zone to 2010 from international financial statistics of international monetary fund. The study discovered that the zone experiences asymmetrical correlations between real exchange rate misalignment and economic performance while the inclusion of equilibrium real exchange rate revealed a symmetrical relationship with economic performance. Further revelation in the study happened to be the cross country correlations which unveiled that four countries emerged to have a moderate degree of symmetrical relationship using some macroeconomic variables such real exchange rate, misaligned real exchange rate, openness, inflation and output. The study concluded by admonishing the zone to commence with four promising economies such as a Gambia, Ghana, Nigeria and Sierra Leone.

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