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Research Article | Volume 3 Issue 1 (Jan-June, 2022)
Impact of Exchange Rate Volatility on Economic Growth in Ecowas Countries: Multivariate Panel Data Approach
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Under a Creative Commons license
Open Access
Published
March 20, 2022
Abstract
The study examined the impact of exchange rate volatility on economic growth in ECOWAS countries. Specifically, the study sought to: determine the impact of exchange rate volatility on economic growth in ECOWAS countries and ascertain the impact of real effective exchange rate on economic growth in ECOWAS countries. This study made use of expost-facto research design Four countries were selected from Anglophone and Francophone countries. The study countries were Nigeria, Gambia, Mali and Burkina-feso. The time scope period of study was 2002 to 2021. The study has 20 annual years cut cross 4 selected ECOWAS member countries give 80 numbers of observations. The data was sourced from World Bank Database Indicators. Hausman test is further applied to determine the appropriate estimator between fixed and random effect. The data analytical techniques were panel generalized panel least square method for estimation of parameter. The empirical results of the study were as follows: Effective real exchange rate has negative and significant impact on economic growth in ECOWAS member countries (P-value (0.0003) < its significant value (0.05]. Exchange rate volatility has negative and significant impact on economic growth in ECOWAS member countries (P-value (0.0000) < its significant value (0.05]. This study concluded that exchange rate volatility has negative and significant impact on economic growth in ECOWAS member countries. The study recommended that government ECOWAS countries should start and sustain depreciation policy in ECOWAS currencies. This means that ECOWAS member countries should be extra careful when implementing exchange rate depreciation policies, because it may harm the GDP growth rate.
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