Exchange rate regimes and growth in the economic community of west African states

Amath Ndiaye
Maitre de Conférences (FASEG) Université Cheikh Anta Diop de Dakar (UCAD)

Komlan Amen Dogbe
Ingénieur-Statisticien-Economiste (ISE) ENSAE Dakar

Abstract: The objective is to study the effect of the exchange rate regime on per capita income growth of ECOWAS countries, using a panel data covering the period 2000-2015. The study is based on the generalized method of moments, to show that, apart from cycli- cal fluctuations, the exchange rate regime, whether fixed or flexible, has no influence on the growth of the per capita income of the ECOWAS countries. According to our results, the fixed exchange rate regime has a negative but cyclical effect on the growth of the per capita income of the WAEMU countries, while for the WAMZ countries, the effect of the flexible regime on growth remains positive but cyclical. In the long term, the structural determinants of per capita income growth in ECOWAS countries are the output gap, the value added of agriculture, and investment. The exchange rate regime is not a structural determinant of economic growth in the ECOWAS countries.

Keywords : exchange rate regimes, growth.

Jel Classification : E23, F31.