Diende e, Louis-Joel Basneouinde; Diende e, Achille Augus in; Eggoh, Jude
A icle
Role o cen al bank independence on mone a y
in eg a ion and business cycle synch oniza ion in he
economic communi y o Wes A ican S a es
Cogen Economics & Finance
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Taylo & F ancis G oup
Sugges ed Ci a ion: Diende e, Louis-Joel Basneouinde; Diende e, Achille Augus in; Eggoh,
Jude (2024) : Role o cen al bank independence on mone a y in eg a ion and business cycle
synch oniza ion in he economic communi y o Wes A ican S a es, Cogen Economics & Finance,
ISSN 2332-2039, Taylo & F ancis, Abingdon, Vol. 12, Iss. 1, pp. 1-22,
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Role o cen al bank independence on mone a y
in eg a ion and business cycle synch oniza ion in
he economic communi y o Wes A ican S a es
Louis-Joel Basneouinde Diende e, Achille Augus in Diende e & Jude Eggoh
To ci e his a icle: Louis-Joel Basneouinde Diende e, Achille Augus in Diende e & Jude
Eggoh (2024) Role o cen al bank independence on mone a y in eg a ion and business cycle
synch oniza ion in he economic communi y o Wes A ican S a es, Cogen Economics &
Finance, 12:1, 2399959, DOI: 10.1080/23322039.2024.2399959
To link o his a icle: h ps://doi.o g/10.1080/23322039.2024.2399959
© 2024 The Au ho (s). Published by In o ma
UK Limi ed, ading as Taylo & F ancis
G oup
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GENERAL & APPLIED ECONOMICS | RESEARCH ARTICLE
Role o cen al bank independence on mone a y in eg a ion and
business cycle synch oniza ion in he economic communi y o
Wes A ican S a es
Louis-Joel Basneouinde Diende e
a
, Achille Augus in Diende e
a
and Jude Eggoh
b,c
a
Depa men o Economics, CEDRES, Uni e si y Thomas SANKARA, Ouagadougou, Bu kina Faso;
b
GRANEM, Uni e si y o
Ange s, Ange s, F ance;
c
Depa men o Economics, Uni e si y o Abomey-Cala i, Abomey-Cala i, Republic o Benin
ABSTRACT
This a icle examines he e ec s o mone a y in eg a ion on he synch oniza ion o
he business cycle wi hin ECOWAS (Economic Communi y o Wes A ican S a es) and
con ibu es o he economic li e a u e dealing wi h hese aspec s. Fi s , he indica o s
o de ac o and de ju e cen al bank independence a e conside ed o examine he
ole o cen al bank independence in he ela ionship be ween mone a y in eg a ion
and business cycle synch oniza ion. Second, he ARDL e o co ec ion es ima o is
used o analyze bo h sho - and long- un ela ionships and o add ess po en ial p ob-
lems ela ed o endogenous a iables. Using panel da a co e ing 105 coun y pai s
om 1990 o 2020, he es ima ion esul s show a posi i e and s a is ically signi ican
e ec o mone a y in eg a ion on he long- un synch oniza ion o he business cycle.
Rega ding sho - e m synch oniza ion, he conclusions a e mixed. O e all, his s udy
a gues o he implemen a ion o economic policy measu es aimed, among o he
hings, a complying wi h con e gence c i e ia, s eng hening ade ag eemen s, and
ensu ing he independence o he cen al bank o he u u e mone a y union.
IMPACT STATEMENT
This a icle demons a es ha mone a y in eg a ion p omo es long- e m business
cycle synch oniza ion wi hin ECOWAS, highligh ing he impo ance o cen al bank
independence. Using panel da a and an ARDL me hod, i e eals signi ican e ec s o
his in eg a ion while no ing mixed esul s in he sho e m. The indings ad oca e
o economic policies ocused on con e gence c i e ia, s eng hened ade ag ee-
men s, and cen al bank independence o enhance egional s abili y.
ARTICLE HISTORY
Recei ed 27 Decembe 2023
Re ised 18 June 2024
Accep ed 29 Augus 2024
KEYWORDS
Mone a y in eg a ion;
in la ion; cen al bank
independence; business
cycle synch oniza ion; panel
ARDL p ocess; ECOWAS
SUBJECTS
Mac oeconomics; Mone a y
Economics; A ica - Regional
De elopmen
JEL CLASSIFICATION
F36; E31; E58; E32; O55
In oduc ion
Mone a y in eg a ion, which in ol es he coo dina ion o mone a y policy o he adop ion o a common
cu ency by se e al coun ies, aims o p omo e economic con e gence and s abili y wi hin a egion o
economic bloc (Co den, 1972). This p ocess usually in ol es he emo al o ba ie s o ade and capi al
mo emen s and he coo dina ion o economic policies o p omo e g ea e economic con e gence
be ween pa icipa ing coun ies. The bene i s o mone a y in eg a ion include be e capi al alloca ion,
highe g ow h po en ial, lowe ansac ion cos s, and g ea e p ice anspa ency (Baele e al., 2004).
The dynamic heo y o economic in eg a ion, in oduced by Balassa (1961) and u he elabo a ed by
Coope and Massell (1965), emphasizes he dynamic e ec s o in eg a ion and ecognizes ha s a ic ana-
lysis is no su icien o ully cap u e hese e ec s. Op imal cu ency a ea (OCA) heo y, as ou lined by
De G auwe and Mongelli (2005), iden i ies c i e ia o he o ma ion o a mone a y union, including simi-
la in la ion a es and business cycle synch oniza ion (BCS), which a e c ucial o an e ec i e common
mone a y policy (Ishiyama, 1975; Kenen, 1969; McKinnon, 1963; Mundell, 1961). BCS, a undamen al
CONTACT Louis-Joel Basneouinde Diende e [email p o ec ed] Depa men o Economics, CEDRES, Uni e si y Thomas SANKARA,
Ouagadougou, Bu kina Faso.
ß2024 The Au ho (s). Published by In o ma UK Limi ed, ading as Taylo & F ancis G oup
This is an Open Access a icle dis ibu ed unde he e ms o he C ea i e Commons A ibu ion License (h p://c ea i ecommons.o g/licenses/by/4.0/), which
pe mi s un es ic ed use, dis ibu ion, and ep oduc ion in any medium, p o ided he o iginal wo k is p ope ly ci ed. The e ms on which his a icle has been
published allow he pos ing o he Accep ed Manusc ip in a eposi o y by he au ho (s) o wi h hei consen .
COGENT ECONOMICS & FINANCE
2024, VOL. 12, NO. 1, 2399959
h ps://doi.o g/10.1080/23322039.2024.2399959
concep in mac oeconomic analysis ha e e s o he endency o di e en componen s o he economy
o e ol e simila ly o e ime (Tapsoba, 2009; Zou i, 2020), plays a cen al ole in his con ex (Diende e
e al., 2024).
In addi ion, inancial and mone a y dynamics ha e a signi ican impac on he economic landscape.
Rapid adap a ion o shocks is c ucial, wi h inc eased inancial and mone a y linkages acili a ing he
edis ibu ion o capi al h ough compa a i e ad an age and p omo ing expanded ade oppo uni ies
(Ga c
ıa-He e o & Ruiz, 2008). Mo eo e , he ansi ion om sa e, low- e u n in es men s o highe - isk,
high- e u n en u es leads o inc eased con e gence o indus ial s uc u es amid widesp ead sec o al
expansion (Hea hco e & Pe i, 2002; Schia o, 2008). The deepening o inancial and mone a y linkages
leads o inc eased BCS, d i en by signi ican demand-side e ec s. Fo example, la ge in es men s by
consume s om di e en coun ies in a pa icula s ock ma ke can igge a simul aneous decline in
demand o consume and capi al goods. A he same ime, con agion e ec s h ough inancial channels
could ampli y he c oss-bo de e ec s o mac oeconomic luc ua ions (Kose e al., 2003).
In con as , he ins i u ional dimension o mone a y in eg a ion, associa ed wi h concep s such as
ime inconsis ency de eloped by Kydland and P esco (1977), emphasizes he po en ial o educed
in la ion bias h ough an independen cen al bank (CBI) (Backus & D i ill, 1985; Ba o & Go don, 1983).
Due o ime inconsis ency, many de eloping coun ies, including hose o he Economic Communi y o
Wes A ican S a es (ECOWAS), op o in la ion- a ge ing mone a y policy (Mahawiya e al., 2020).
The economic con ex is cha ac e ized by an expansion o he global money supply because o he
measu es aken o comba he economic c isis caused by he COVID-19 pandemic. In Wes A ica, in la-
ion ose om an a e age o 9.7% in he pe iod 2014–2020 o 12.7% in 2021 and 17% in 2022. In con-
as o Eas A ica, whe e cu encies a e no pegged o each o he , he Wes A ican Economic and
Mone a y Union (WAEMU) has a con en ional cu ency pegging sys em, esul ing in gene ally lowe
in la ion a es. The ise in in la ion in 2022 in Wes A ica and ac oss he con inen is p ima ily due o
highe ood and ene gy p ices caused by he dis up ion o he global supply chain because o he
Russian in asion o Uk aine. Many coun ies in Wes A ica a e expe iencing high in la ion a es: in la ion
in Ghana ose wi h an a e age o 13% in he pe iod 2014–2020 and om 10% in 2021 o 31.5% in 2022,
om 12.1% and 11.9% o 26.1% in Sie a Leone, and om 12.3% and 17% in he same pe iod o 18.8%
in Nige ia. In addi ion, in la ion in Bu kina Faso ose om an a e age o 0.5% in he pe iod 2014–2020
and 3.9% in 2021 o 14.4% in 2022, while p ices in Mali ose om 0.5% and 3.9% o 9.7% in 2022
(A ican De elopmen Bank, 2023).
In his con ex , he ollowing ques ion a ises: Wha ole does cen al bank independence play in he
link be ween mone a y in eg a ion and he synch oniza ion o he business cycle in ECOWAS coun ies?
The main objec i e o his s udy is o assess he ele ance o he es ablishmen o a mone a y union
wi hin ECOWAS conside ing he e ec s o mone a y in eg a ion on business cycle synch oniza ion. The
unde lying hypo hesis is ha cen al bank independence has a posi i e and s a is ically signi ican e ec
on he ela ionship be ween mone a y in eg a ion and BCS wi hin ECOWAS coun ies. The au ho i ies o
he Economic Communi y o Wes A ican S a es (ECOWAS) launched he Economic and Mone a y
Coope a ion P og am (EMCP) o accele a e he in oduc ion o a common cu ency. This p og am is
based on a wo-p onged app oach ha p o ides o he c ea ion o an addi ional cu ency zone along-
side he Wes A ican Economic and Mone a y Union (WAEMU) and he expansion o he exis ing mone -
a y union. The Wes A ican Mone a y Zone (WAMZ), es ablished in 2003, comp ises coun ies such as
Gambia, Ghana, Guinea, Libe ia, Nige ia, and Sie a Leone, while he second componen aims o in e-
g a e he WAEMU coun ies wi h hose o he newly c ea ed WAMZ wi hin he amewo k o he EMCP.
This s udy is mo i a ed by se e al ac o s. Fi s , in a egional con ex whe e coun ies a e seeking
g ea e economic in eg a ion, i is c ucial o unde s and how na ional mone a y policies and coo din-
a ion be ween cen al banks a ec he BCS. Second, cen al bank independence is a key elemen o eco-
nomic go e nance and i s impac on egional economic con e gence should be s udied o in o m u u e
policy decisions. Finally, a be e unde s anding o hese dynamics can help iden i y po en ial challenges
and o mula e e ec i e policies o p omo e economic s abili y and sus ainable g ow h in he egion.
I is wo h no ing ha esea ch on he ela ionship be ween mone a y in eg a ion and BCS o en
ocuses on he e ec s o mone a y egimes such as in la ion a ge ing, especially in de eloped coun ies
(Delgado e al., 2020; Flood & Rose, 2010; Inoue e al., 2012; Rose, 2009). This esea ch gap highligh s
2 L. -J.B. DIENDERE, A. A. DIENDERE, AND J. EGGOH
he need o in es iga e neglec ed aspec s such as analyzing he e ec s o in la ion di e en ials on he
BCS, conside ing he ole o cen al bank independence, and conduc ing bo h sho - and long- e m anal-
yses (Camacho e al., 2006; F ankel & Rose, 1997; Ga c
ıa-He e o & Ruiz, 2008; Nzimande & Ngalawa,
2017). Con en ional me hods such as o dina y leas squa es and ins umen al a iables a e limi ed in
accu a ely assessing he impac o mone a y in eg a ion on he BCS and he ole o cen al bank inde-
pendence in his ela ionship, which equi es mo e obus analy ical app oaches.
This s udy aims o ill hese gaps by examining bo h de ac o and de ju e cen al bank independence
on a coun y-by-coun y basis o in es iga e he ole o cen al bank independence in mone a y in eg a-
ion and i s ela ionship wi h he BCS. Fu he mo e, his s udy highligh s he posi i e ole o cen al
bank independence in p omo ing mone a y policy coope a ion and coo dina ion wi hin ECOWAS mem-
be coun ies. An independen cen al bank is be e placed o ac i ely engage in coo dina ion ini ia i es
such as he ha moniza ion o mone a y policy and he implemen a ion o common measu es o cushion
economic shocks, hus p omo ing economic con e gence. In addi ion, he use o he ARDL es ima o
wi h e o co ec ion enables he dynamic analysis o he ela ionship be ween mone a y in eg a ion
and BCS in he sho and long un, sol ing p oblems ela ed o endogenous a iables and imp o ing
es ima ion accu acy. Finally, his s udy p oposes an analysis o he ole o poli ical ins abili y in he ela-
ionship be ween mone a y in eg a ion and business cycle synch oniza ion in ECOWAS and p o ides
insigh s in o he complex in e play o ac o s a ec ing egional economic s abili y and g ow h.
The es o he pape is s uc u ed as ollows. The second sec ion p esen s he s ylized ac s, while
he hi d sec ion is de o ed o he li e a u e e iew. The ou h sec ion deals wi h he ma e ials and
me hods, and he i h sec ion con ains he main esul s and discussions. In he six h sec ion, obus ness
es s a e pe o med. The pape ends wi h a conclusion.
S ylized ac s on mone a y in eg a ion
In his sec ion, he dynamics o in la ion which cons i u es one o he main s ylized ac s o mone a y
in eg a ion will be p esen ed. Fo his pu pose, he ECOWAS is di ided in o a WAEMU a ea and a non-
WAEMU a ea.
In la ion con ol in he WAEMU coun ies
Con olling in la ion a ound he annual a ge o 3% is a key componen o WAEMU’s mone a y policy.
Despi e he e o s o he mone a y au ho i ies o espec his objec i e, he dynamics o in la ion ha e
been cha ac e ized in ecen yea s by mode a e a iabili y, linked o se e al ac o s, such as he in oduc-
ion o he Common Ex e nal Ta i (CET) in 2000, he inc ease in VAT on ce ain consume goods, ood
sho ages caused by d ough and socio-poli ical c ises in Mali and C^
o e d’I oi e. The Union’s ex e nal
dependence on ene gy and ood also played an impo an ole in hese luc ua ions. Figu e 1 shows
in la ion ends wi hin WAEMU coun ies.
F om 2008 o 2018, in la ion a es in he WAEMU membe coun ies a ied, al hough he o e all
ends emained simila . In 2008 and 2011, in la ion spiked ac oss he Union, eaching 7.4% and 3.9%
espec i ely, mainly due o ac o s such as he ood and ene gy c isis and he pos -elec ion c isis in C^
o e
d’I oi e. Subsequen ly, in 2012, some coun ies such as Benin, Mali, and Bu kina Faso eco ded in la ion
a es ha we e well abo e he con e gence h eshold o 3%. In 2017, in la ion ose in some coun ies
due o domes ic ac o s, including ising en s, ood p ices, and local g ain p ices. Ren s inc eased in
mos coun ies, pa icula ly in Nige and C^
o e d’I oi e, while local ce eal p ices sky ocke ed due o
declining p oduc ion in C^
o e d’I oi e and Senegal (BCEAO, 2017). Be ween 2015 and 2020, howe e , he
in la ion a e s abilized in all coun ies in he WAEMU coun ies.
Vola ili y and pe sis ence o in la ion in non-WAEMU coun ies
Figu e 2 highligh s in la ion end in he non-WAEMU coun ies o e he pe iod 1990–2020. The p ice
dynamic wi hin non-WAEMU coun ies emains ela i ely mo e uns able and in la ion is mo e pe sis en .
COGENT ECONOMICS & FINANCE 3
Figu e 1. In la ion a es in WAEMU coun ies (%).
Sou ce: Au ho based on da a om he In e na ional Mone a y Fund (IMF, 2022).
Figu e 2. In la ion a es in non-WAEMU coun ies (%).
Sou ce: Au ho based on da a om he In e na ional Mone a y Fund (IMF, 2022).
4 L. -J.B. DIENDERE, A. A. DIENDERE, AND J. EGGOH
Du ing his pe iod, in la ion in he en i e WAMZ egion luc ua ed signi ican ly om one yea o he
nex , a e aging 10.07%.
Each coun y in he egion expe ienced signi ican luc ua ions in in la ion, wi h some coun ies man-
aging o educe hei in la ion a es o e ime, while o he s main ained high le els. Nige ia in pa icula
expe ienced signi ican luc ua ions, peaking a 72.84% in 1995, while Cabo Ve de has consis en ly had
ela i ely low in la ion a es. The mone a y coope a ion ag eemen signed in Ma ch 1998 wi h Po ugal
allowed Cabo Ve de o main ain p ice s abili y. Despi e gene ally posi i e ends, some WAMZ coun ies
ha e s uggled wi h high in la ion a es, e lec ing unde lying economic o mone a y challenges. In
2020, Ghana eco ded he highes in la ion a e a a ound 9.89%, while Sie a Leone a e aged 8.55%
om 2010 o 2020. Va ious ac o s in luence in la ion a es, including mone a y policies, luc ua ions in
commodi y p ices—mainly oil, demog aphic condi ions, poli ical ins abili y, and coun y-speci ic eco-
nomic and ins i u ional policies.
Li e a u e e iew
This sec ion p esen s he heo e ical and empi ical li e a u e on he ela ionship be ween mone a y in e-
g a ion and BCS.
Theo e ical li e a u e
The adi ional heo y o economic in eg a ion, i s p esen ed by Vine (1950), examines he ad an ages,
such as ade c ea ion, and disad an ages, such as ade di e sion, associa ed wi h in eg a ion. Vine
(1950) assumes ha ade c ea ion inc eases wel a e, while ade di e sion dec eases i . The dynamic
heo y o economic in eg a ion, de eloped by Balassa (1961), goes beyond his adi ional iew and
shi s he ocus o he dynamic e ec s, including inc eased compe i ion, in es men lows, economies o
scale, echnology ans e , and imp o ed p oduc i i y. By elimina ing exchange a e luc ua ions, mone -
a y in eg a ion acili a es ade be ween membe coun ies, p omo ing specializa ion and di e si ica ion
o ma ke s. Building on his no ion o dynamic e ec s, Balassa’s(1961) heo y ocuses on b oade eco-
nomic in eg a ion. In con as , mone a y in eg a ion en ails b oade challenges, such as he loss o mon-
e a y so e eign y and he need o coo dina ed economic policies. These challenges should be
conside ed when assessing he easibili y o a mone a y union wi hin he ECOWAS egion. In addi ion,
mone a y in eg a ion can signi ican ly a ec he deg ee o specializa ion in in e na ional ade.
Rega ding his in luence on ade specializa ion, he wo-coun y In e na ional Real Business Cycle
(IRBC) model, as p oposed by Backus e al. (1992) and Bax e and C ucini (1995) sugges s ha bila e al
ade se es as a mechanism o esou ce ans e be ween coun ies in esponse o echnological shocks
and ul ima ely educes ou pu co ela ions. Con e sely, Obs eld (1994) inds ha mone a y in eg a ion
encou ages in es men in high- isk p ojec s, p omo es specializa ion based on compa a i e ad an age,
and allows o mo e e icien esou ce alloca ion. Kalemli-Ozcan e al. (2001,2003) also ind ha di e si i-
ca ion o owne ship h ough in e na ional inancial ma ke s imp o es he abili y o egions and coun ies
o abso b idiosync a ic shocks, he eby educing he synch oniza ion o business cycles be ween
coun ies.
Beyond he impac on ade specializa ion, unde s anding he link be ween mone a y in eg a ion, as
measu ed by he simila i y o in la ion a es among coun ies, and he synch oniza ion o business cycles
is c ucial o g asping he e ec s o mone a y coo dina ion on egional mac oeconomic s abili y. The
g ea e simila i y in in la ion a es be ween membe coun ies could mean a con e gence o mone a y
policies and be e coo dina ion o economic policies, ul ima ely a o ing close synch oniza ion o busi-
ness cycles. This enhanced synch oniza ion can educe mac oeconomic asymme ies and inc ease esili-
ence o ex e nal economic shocks, he eby s eng hening egional s abili y (Ga c
ıa-He e o & Ruiz, 2008).
In his pe spec i e, se e al heo e ical a gumen s link cen al bank independence and in la ion using
a ious mechanisms. The heo y o ime inconsis ency, as elucida ed by Backus and D i ill (1985) and
Ba o and Go don (1983), is undamen al o unde s anding hese mechanisms. Buchanan and Wagne
(1977) and Kydland and P esco (1977) echo he analysis o Ba o and Go don (1983), sugges ing ha
cen al bank independence can educe in la ion expec a ions, he eby esul ing in lowe in la ion. In he
COGENT ECONOMICS & FINANCE 5
same ein, mone a y in eg a ion, and cen al bank independence ha e signi ican implica ions o eco-
nomic wel a e and policy ou comes. While adi ional in eg a ion heo ies unde sco e ade bene i s and
disad an ages, dynamic in eg a ion heo ies emphasize ad an ages like imp o ed p oduc i i y and spe-
cializa ion, speci ically in mone a y in eg a ion. Howe e , hese dynamics come wi h challenges, includ-
ing losing mone a y so e eign y and policy coo dina ion, which a e pa icula ly ele an in he ECOWAS
egion. The analysis o he impac o cen al bank independence on in la ion sugges s ha au onomous
cen al banks can help main ain low in la ion expec a ions, he eby dampening ac ual in la ion. These
insigh s unde sco e he impo ance o ins i u ional design and policy decisions in shaping economic ou -
comes, u ging policymake s o conside hese dynamics when o mula ing economic de elopmen and
s abili y s a egies.
Empi ical li e a u e
This sub-sec ion p esen s he empi ical li e a u e on he ela ionship be ween mone a y in eg a ion and
he synch oniza ion o business cycles. I hen ocuses on he ela ionship be ween in la ion a ge ing,
mone a y policy, ins i u ions, and he synch oniza ion o business cycles.
In la ion a ge ing and business cycle synch oniza ion
Mac oeconomic policy plays a c ucial ole in shaping he deg ee o business cycle synch oniza ion (BCS).
Economic au ho i ies se policy amewo ks o achie e ade, mone a y, and exchange a e policy objec-
i es. An impo an aspec o mone a y policy is in la ion a ge ing (IT), which has become a main s a -
egy o s abilizing in la ion, pa icula ly in eme ging ma ke s, as mo e and mo e coun ies adop his
sys em (Schmid -Hebbel & Ca asco, 2016). P oponen s o in la ion a ge ing hypo hesize ha i has a
posi i e e ec on he BCS as i allows cen al banks o egula e in e es a es o main ain a s able le el
o in la ion, hus imp o ing he esponse o domes ic ou pu o ex e nal dis u bances (Flood & Rose,
2010). Cho and Rhee (2015) examine he e ec i eness o IT in s abilizing he eal economy, ocusing on
ad anced coun ies ha adop ed IT in he ea ly 1990s. Based on mone a y accoun ing me hodology
o e he business cycle, hey conclude ha mone a y policy has signi ican ly educed business cycle luc-
ua ions since he in oduc ion o IT.
Khan e al. (2020) show ha IT has a posi i e impac on he BCS o Sou h Asian coun ies bo h be o e
and a e he es ablishmen o he Sou h Asian Associa ion o Regional Coope a ion (SAARC), con i ming
he indings o Flood and Rose (2010). Delgado e al. (2020) also highligh ha he adop ion o IT
imp o es BCS and emphasize he impo ance o c edibili y o announcemen s o cycle linkage.
Mo eo e , hei esul s sugges ha he e ec s on synch oniza ion a e e en mo e p onounced when
economic agen s exhibi long- e m memo y when assessing he c edibili y o in la ion expec a ions.
In summa y, mac oeconomic policy, especially in la ion a ge ing, in luences he synch oniza ion o
business cycles. The in oduc ion o IT enables he egula ion o in e es a es o keep in la ion s able
and imp o e he esponsi eness o domes ic ou pu o ex e nal shocks. Resea ch con i ms he posi i e
e ec on he synch oniza ion o business cycles and unde lines he impo ance o he c edibili y o IT
announcemen s. Then, his app oach unde lines i s key ole in economic policy o mula ion.
Mone a y policy and business cycle synch oniza ion
Asymme ic economic imbalances be ween na ions a e o en due o di e ences in mone a y policy man-
agemen (Beck, 2013). In addi ion o he ansmission e ec s o mone a y dis u bances, mac oeconomic
ins abili y a ec ing membe coun ies can also lead o asymme ic shocks (De G auwe & S
en
egas, 2003).
The p opaga ion o hese shocks om one a ea o ano he is assumed o in luence he synch oniza ion
o he business cycle (BCS) di e en ly. Acco ding o B€
owe and Guillemineau (2006) and Dai (2014),
coun ies ha adop a simila mone a y policy s ance end o eac simila ly o mone a y policy dis u -
bances, which acili a es he ansmission o symme ic dis u bances and s eng hens he BCS.
Con e sely, in he e en o mac oeconomic dis u bances a ec ing membe coun ies wi h di e gen
mone a y policy posi ions, coun ies pu suing a conce ed mone a y policy app oach may ha e di icul-
ies in dealing wi h hese speci ic dis u bances independen ly (B€
owe & Guillemineau, 2006; Dai, 2014).
Wi hou mone a y policy coo dina ion, membe coun ies could make indi idual adjus men s o coun e
6 L. -J.B. DIENDERE, A. A. DIENDERE, AND J. EGGOH
hese shocks (Fid muc & Ko honen, 2010). Howe e , in a common cu ency a ea, such as he WAEMU
and he CMA (Common Mone a y A ea) be ween 1960 and 2016, coun ies lack he lexibili y o ake
indi idual mone a y policy ac ions o espond o economic shocks a ec ing hei economies (Ma e a &
F anses, 2023). Fankem and Mbesa (2023) examine he po en ial o an A ican mone a y union based
on he synch oniza ion o he business cycle be ween i e Regional Economic Communi ies (RECs): he
Eas A ican Communi y, he Economic Communi y o Cen al A ican S a es, he Economic Communi y
o Wes A ican S a es, he Sou he n A ican De elopmen Communi y, and he A ab Magh eb Union.
Using a no el con inuous wa ele app oach, he analysis e eals he e ogeneous synch oniza ion pa e ns
ac oss ime and ho izons be ween RECs. Despi e con olling o o e lapping membe ships in se e al
RECs, he le el o synch oniza ion emains insu icien , sugges ing ha A ican coun ies may no ye be
ully bene i ing om a common mone a y policy.
Mes e and Od y (2021) analyze he impac o he Eu opean Cen al Bank’s (ECB) mone a y policy on
he BCS in Eu ope om 2000 o 2018. Using wa ele s and dynamic panel es ima ion me hods, hey sug-
ges ha he ECB’s uncon en ional mone a y policy posi i ely a ec s he BCS. In addi ion, iscal policy
can o se coun y-speci ic mo emen s in business cycles (Beck, 2022). Despi e ini ial di e ences in he
business cycles o he membe coun ies, Gammadigbe and Dioum (2022) ind ha a con e gence o
business cycles is likely wi hin ECOWAS om 1990 o 2018. They emphasize he nega i e and non-sig-
ni ican in luence o he simila i y o he mone a y base on he con e gence o business cycles in
ECOWAS, bu a nega i e and signi ican in luence wi hin he WAEMU.
Resea ch comes o di e en conclusions ega ding he ela ionship be ween in la ion di e en ials and
business cycle synch oniza ion. F ankel and Rose (1997) and Nzimande and Ngalawa (2017) ind a posi-
i e and s a is ically signi ican e ec o in la ion di e en ials on BCS wi hin he SADC coun ies, while
Ga c
ıa-He e o and Ruiz (2008) obse e a nega i e e ec be ween Spain and he G-7 coun ies. Howe e ,
Camacho e al. (2006) ind no e idence o he in luence o in la ion di e en ials on he BCS wi hin he
Eu opean Union.
Huang e al. (2015) and Nguyen e al. (2020) show di e en e ec s o di e en in la ion a es on he
BCS in China and Eas Asia espec i ely. In addi ion, Inklaa e al. (2008) and Nzimande and Ngalawa
(2017) sugges ha mone a y policy coo dina ion, as measu ed by he simila i y o sho - e m in e es
a es o in la ion a es, is associa ed wi h g ea e BCS in he OECD and SADC egions.
To summa ize, economic imbalances a ise om di e gences in mone a y policy ha a ec he dis i-
bu ion o shocks. Cyclical synch oniza ion depends on na ional esponses o mone a y policy dis u ban-
ces, wi h simila mone a y policy se ings a o ing synch oniza ion. Uncon en ional mone a y policy
measu es can inc ease synch oniza ion, while mone a y policy coo dina ion can educe i . The complex-
i y o he in e ac ions be ween in la ion a ge ing, in la ion di e en ials, and BCS unde lines he impo -
ance o mone a y policy coo dina ion o g ea e economic ha moniza ion.
Ins i u ions and cyclic synch oniza ion
The quali y o ins i u ions and go e nance a e assumed o in luence he synch oniza ion o Business
Cycles ac oss coun ies. In a s udy conduc ed by Al ug and Cano a (2014), he ela ionship be ween
ins i u ions, cul u e, and business cycles was examined o a sample o 45 coun ies in Eu ope, he
Middle Eas , and No h A ica. Thei indings show ha be e go e nance p ac ices, pa icula ly cen al
bank independence, a e associa ed wi h mo e obus business cycles.
Fo coun ies ha ha e adop ed IT egimes, main aining he independence o hei mone a y policy
is essen ial o de eloping close in e ac ions wi h he es o he wo ld. This is pa icula ly impo an o
eme ging economies seeking o s eng hen hei ela ions wi h ad anced economies. Wi hou su icien
independence, hese economies could expe ience economic desynch oniza ion, leading o a misalign-
men o economic and ade ag eemen s. Cen al bank independence is c ucial o he synch oniza ion
o in la ion and business ac i i y. I a cen al bank is independen , i can make mone a y policy decisions
o ensu e p ice s abili y wi hou being in luenced by sho - e m poli ical conside a ions. This p omo es a
mo e s able and p edic able mone a y policy and con ibu es o a s onge BCS be ween coun ies.
Fu he mo e, he independence o he cen al bank ensu es he s abili y o in la ion, as i enables
measu es o be aken o comba in la ion, e en i hese mus be aken agains he will o go e nmen s.
Consequen ly, when a cen al bank is independen , i can ensu e p ice s abili y, which in u n can
COGENT ECONOMICS & FINANCE 7
on long- e m business cycle synch oniza ion wi hin ECOWAS sugges s ha economies wi h mo e
au onomous cen al banks a e likely o bene i om imp o ed mone a y s abili y, cohe en economic
policies, and e ec i e coo dina ion among membe coun ies. This g ea e independence could boos
in es o con idence, educe economic unce ain y, and p omo e he con e gence o long- e m economic
goals, con ibu ing o g ea e synch oniza ion o business cycles in he egion, which in u n os e s
deepe economic in eg a ion and sus ainable g ow h.
The e ec s o CBI on he ela ionship be ween mone a y in eg a ion and BCS appea o be posi i e in
he sho un, al hough no s a is ically signi ican , excep o eg ession (3). Howe e , in he long un,
he in e ac ion a iable has a nega i e and signi ican e ec on BCS, indica ing a nega i e in luence o
CBI on he ela ionship be ween mone a y in eg a ion and BCS. Speci ically, a 1% inc ease in he in e -
ac ion be ween he in la ion di e en ial and he CBI is associa ed wi h a 0.189 and 0.041% dec ease
in BCS.
To summa ize, cen al bank independence has a long- e m nega i e impac on he ela ionship
be ween mone a y in eg a ion and BCS. Con e sely, he e ec s o mone a y in eg a ion and cen al bank
independence on BCS a e posi i e and signi ican . In he sho un, he in e ac ion a iable has a posi i e
and signi ican e ec on he BCS. An au onomous cen al bank p o ides sho - e m ce ain y and p edic -
abili y o economic agen s by p io i izing p ice s abili y, p omo ing be e economic pe o mance, minimiz-
ing dis up ions, and imp o ing business cycle synch oniza ion. In he long un, howe e , he coe icien o
he in e ac ion a iable can mo e in a nega i e di ec ion and hinde he cen al bank’s abili y o adap o
changing economic condi ions. I he cen al bank ocuses solely on p ice s abili y, i may neglec o he
impo an economic ac o s such as economic g ow h and employmen , which can lead o poo e eco-
nomic pe o mance and inadequa e in la ion con ol. In addi ion, he igidi y o mone a y policy can limi
he cen al bank’s lexibili y in esponding o economic shocks, which can make he BCS.
The nega i e impac o cen al bank independence on he ela ionship be ween in la ion simila i y
and BCS wi hin ECOWAS could indica e sho comings in he egion’s mone a y policy and lead o eco-
nomic dis up ion. Assume ha cen al bank independence wi hin ECOWAS is comp omised. In his case,
mone a y policy could be in luenced by poli ical o budge a y conside a ions o he de imen o p ice
s abili y objec i es, which could lead o excessi e p ice ola ili y and uncon olled in la ion and unde -
mine economic s abili y in he egion. In addi ion, he lack o mone a y policy coo dina ion wi hin
ECOWAS could encou age a desynch oniza ion o he business cycle and dis up egional economic
dynamics.
Thus, while cen al bank independence can b ing sho - e m bene i s by s eng hening he ela ion-
ship be ween he in la ion di e en ial and he BCS, i could be de imen al in he long un by limi ing
he cen al bank’s abili y o adap o economic de elopmen s. Consequen ly, independence and lexibil-
i y mus be balanced o maximize he bene i s o he BCS.
Robus ness check
This sec ion con ains he esul s o he obus ness es s. Fi s ly, he esul s o he in e es a e sp ead
di e en ials a e p esen ed, ollowed by he esul s o wo ECOWAS zones: he WAEMU zone and he
non-WAEMU zone.
Taking in o accoun in e es a e sp ead di e en ials
Table 8 shows he esul s o he eg essions including in e es a e sp ead di e en ials (IRSD) (B€
owe &
Guillemineau, 2006). I he in e ac ion a iable is conside ed, he e is a nega i e e ec in he sho e m,
which is no signi ican in he eg ession (3) and (4) in Table 8. In he long e m, he in e ac ion a iable
has a posi i e and signi ican e ec on cyclical synch oniza ion in eg ession (3), bu a nega i e and
non-signi ican e ec in eg ession (4).
The independence o cen al banks is c ucial o ensu ing p ice s abili y h ough mone a y policy. Any
b each o his independence, whe e policy is in luenced by poli ical o budge a y conside a ions a he
han p ice s abili y, can lead o ou -o -con ol in la ion and dis up he economy. This has a de imen al
e ec on he synch oniza ion o business cycles and leads o economic unce ain y.
14 L. -J.B. DIENDERE, A. A. DIENDERE, AND J. EGGOH
Suppose, howe e , ha he cen al bank exe s a s able and p edic able in luence on in e es a es o
adjus he money supply. In his case, i p omo es economic g ow h and he synch oniza ion o he busi-
ness cycle by ensu ing s able inancing o economic ac i i y. Consequen ly, he independence o he
cen al bank in he ela ionship be ween he in la ion di e en ial and synch oniza ion can ha e a nega-
i e impac on he synch oniza ion o he business cycle. On he o he hand, i can ha e a posi i e
impac on he ela ionship be ween he in e es a e di e en ial and business cycle synch oniza ion,
hanks o i s in luence on he amoun o liquidi y a ailable in he economy.
Taking in o accoun he di e en ECOWAS zones
Table 9 shows he esul s o he obus ness eg essions o he WAEMU and non-WAEMU zones o
ECOWAS. The analysis o he ela ionship be ween mone a y in eg a ion and business cycle synch oniza-
ion by coun y g oup shows di e en esul s. In he WAEMU zone, his ela ionship is nega i e and sig-
ni ican in he long un, while i is posi i e and signi ican in he non-WAEMU zone. In addi ion, he
in e ac ion a iable be ween in la ion and cen al bank independence is posi i e and signi ican o he
WAEMU coun ies, bu nega i e and signi ican o he non-WAEMU zone.
Table 8. Es ima ion esul s including in e es a e sp ead di e en ials.
(1) (2) (3) (4)
PMG PMG PMG PMG
VARIABLES De ju e De ac o De ju e De ac o
Sho e m ECT −0.943 −0.945 −0.946 −0.957
(0.045) (0.058) (0.044) (0.062)
LD.BCS 0.061 0.083 0.0460.107
(0.025) (0.037) (0.026) (0.038)
D.REER 0.091 0.014 0.061 0.036
(0.062) (0.076) (0.060) (0.078)
LD.REER 0.056 0.114 0.049 0.114
(0.054) (0.073) (0.053) (0.075)
D.TOPEN −0.006 −0.004 −0.012 0.000
(0.013) (0.018) (0.013) (0.018)
LD.TOPEN 0.005 0.023 0.002 0.027
(0.014) (0.015) (0.015) (0.016)
D.SIZE 1.252 0.948 1.240 0.990
(0.193) (0.229) (0.195) (0.237)
LD.SIZE −0.448 −0.419 −0.316 −0.446
(0.120) (0.150) (0.122) (0.165)
D. IRSD −0.519 −0.560 −0.771 −0.588
(0.557) (0.521) (0.934) (0.469)
LD. IRSD 0.096 0.621 0.222 0.839
(0.187) (0.678) (1.149) (0.917)
D.CBI 0.001 −0.011 −0.377 −0.028
(0.069) (0.003) (0.380) (0.036)
LD.CBI 0.018 −0.003 −0.561 −0.016
(0.201) (0.002) (0.595) (0.024)
D.IRSDCBI −0.379 0.090
(5.126) (0.260)
LD.IRSDCBI −1.492 −2.023
(7.796) (2.238)
Cons an 0.169 0.097 0.146 0.117
(0.010) (0.009) (0.009) (0.010)
Long e m REER −0.044 −0.034 −0.036 −0.029
(0.010) (0.010) (0.010) (0.009)
TOPEN 0.003 0.001 0.008 0.000
(0.006) (0.006) (0.005) (0.005)
SIZE −0.024 −0.015 −0.023 −0.017
(0.005) (0.004) (0.005) (0.004)
IRSD −0.065 −0.064 0.042−0.043
(0.019) (0.018) (0.025) (0.019)
CBI 0.033 0.022 0.033 0.027
(0.012) (0.003) (0.027) (0.005)
IRSDCBI 0.097−0.053
(0.156) (0.034)
Obse a ions 3045 2262 3045 2262
No es: S anda d e o s in b acke s; PMG ¼Pooled Mean G oup.
p<0.01; p<0.05; p<0.1.
Sou ce: Au ho .
COGENT ECONOMICS & FINANCE 15
Se ing an in la iona y con e gence h eshold o 3% can lead o economic cycles becoming unbal-
anced due o subop imali y. Fo example, C^
o e d’I oi e migh ha e o inc ease i s in la ion a e o
achie e a ce ain le el o g ow h. In con as , a h eshold o 3% could be app op ia e o he g ow h o
he Togolese economy. Thus, an in la ion h eshold o a ound 3% could be a cons ain o C^
o e d’I oi e,
which would a o g ow h in Togo.
Taking poli ical ins abili y in o accoun
The esul s o he eg essions including poli ical ins abili y a e shown in Table 10. In he sho un, he
coe icien o he in e ac ion a iable be ween he in la ion di e en ial (INFL) and poli ical ins abili y
(PINST) is posi i e bu no signi ican . In he long un, howe e , i becomes nega i e and signi ican .
These obse a ions illus a e he de imen al e ec s o non-democ a ic changes o go e nmen on he
ela ionship be ween in la ion di e en ial and business cycle synch oniza ion, especially when hey do
no ma ch in o he coun ies in he long un.
Table 9. WAEMU s. non-WAEMU coun ies.
WAEMU Non-WAEMU
(1) (2) (3) (4) (5) (6)
PMG PMG PMG PMG PMG PMG
VARIABLES De ju e De ac o De ju e De ac o De ju e De ju e
Sho e m ECT −0.939 −0.902 −0.890 −0.913 −0.942 −0.974
(0.086) (0.064) (0.061) (0.061) (0.097) (0.079)
LD.BCS −0.003 0.002 −0.017 0.022 0.005 −0.000
(0.047) (0.056) (0.037) (0.065) (0.063) (0.051)
D.REER −0.388 −0.239 −0.225 −0.169 0.126 0.056
(0.152) (0.153) (0.148) (0.181) (0.080) (0.065)
LD.REER 0.080 0.147 0.149 0.221 0.011
(0.270) (0.252) (0.279) (0.273) (0.102)
D.TOPEN −0.006 −0.007 −0.004 −0.023 0.038−0.010
(0.033) (0.038) (0.039) (0.035) (0.021) (0.018)
LD.TOPEN −0.010 0.003 −0.024 0.012 0.044
(0.027) (0.030) (0.023) (0.028) (0.024)
L2D. TOPEN 0.056
(0.025)
D.SIZE 1.566 1.508 1.373 1.603 0.508 0.640
(0.323) (0.312) (0.293) (0.329) (0.549) (0.533)
LD.SIZE −0.098 −0.306 −0.240 −0.433
(0.204) (0.237) (0.230) (0.252)
D.INFL −0.021 −0.033 −0.034 0.041 −2.4630.005
(0.089) (0.104) (0.386) (0.112) (1.496) (0.022)
LD.INFL −0.039 −0.047 0.371 0.038 −0.899
(0.076) (0.106) (0.265) (0.101) (1.023)
D.CBI 0.046 −0.010 0.015 −0.038 −0.168 0.450
(0.022) (0.004) (0.023) (0.036) (0.372) (0.340)
LD.CBI 0.062 0.002 0.0360.015
(0.022) (0.004) (0.020) (0.008)
D.(INFLCBI) −0.108 0.852 15.519
(0.858) (3.174) (9.598)
LD.(INFLCBI) −1.046 −0.198 7.580
(0.643) (0.662) (7.038)
In e cep −1.165 −0.182 −0.910 −0.186 0.633 0.468
(0.114) (0.013) (0.065) (0.012) (0.065) (0.037)
Long e m REER 0.512 0.143 0.359 0.104 −0.018 0.033
(0.073) (0.053) (0.063) (0.051) (0.023) (0.019)
TOPEN 0.033 0.030 0.043 −0.001 −0.073 −0.033
(0.015) (0.013) (0.014) (0.011) (0.014) (0.012)
SIZE 0.123 0.014 0.101 0.015 −0.074 −0.056
(0.016) (0.007) (0.015) (0.006) (0.015) (0.013)
INFL −0.097 −0.030 0.4320.125 0.058 0.024
(0.025) (0.025) (0.227) (0.024) (0.021) (0.009)
CBI −0.095 0.018 −0.080 0.002 0.0600.005
(0.011) (0.007) (0.014) (0.010) (0.031) (0.021)
INFLCBI 0.9930.518−0.298
(0.573) (0.282) (0.103)
Obse a ions 812 812 812 812 588 609
No es: S anda d e o s in pa en hesis; PMG ¼Pooled Mean G oup; p<0.01; p<0.05; p<0.1.
Sou ce: Au ho .
16 L. -J.B. DIENDERE, A. A. DIENDERE, AND J. EGGOH
The main easons o hese changes o go e nmen include elec ions, poli ical scandals, poo pe o m-
ance, and sus ainabili y p oblems wi hin mul i-pa y go e nmen s. Rega dless o hei o igin, hese
changes lead o ins abili y and unce ain y among economic ac o s. The impac o hese changes on
local economic pe o mance leads o desynch oniza ion wi h o he coun ies. Howe e , when hese
changes o go e nmen occu simul aneously in wo coun ies, he abo e-men ioned e ec s mani es
hemsel es in bo h economies and adap o he espec i e business cycles.
Fu he mo e, he esul s o he analysis show ha he ne e ec o he poli ical ins abili y a iable is
posi i e o e all in he long e m, which con i ms his hypo hesis. In o he wo ds, mo e p onounced poli -
ical coo dina ion imp o es he synch oniza ion o he business cycle, e en hough mos go e nmen
changes a e gene ally unplanned o andom. Elec o al changes a e mo e p edic able.
Use o al e na i e es ima ion echniques
Table 11 shows he esul s o long- e m eg essions ob ained using eg ession echniques such as Dynamic
O dina y Leas Squa es (DOLS) and Fully Modi ied O dina y Leas Squa es (FMOLS). These linea eg ession
me hods o e he possibili y o conside ing a ious elemen s, including he e ec s o empo al co ela ion
and endogenei y due o he coin eg a ion o a iables. The conclusions d awn om he long- un eg es-
sions using FMOLS and DOLS echniques a e gene ally cong uen in e ms o he di ec ion and s a is ical
ele ance o he coe icien s. The esul s show ha he in e ac ion coe icien o med be ween he in la ion
di e en ial and cen al bank independence has a nega i e and s a is ically signi ican sign in he long- un
eg essions (1), (2), and (3). As o eg ession (4), he esul s indica e ha cen al bank independence has a
posi i e and signi ican impac on he ela ionship be ween he in la ion di e en ial and he BCS in he long
un. O e all, hese esul s a e consis en wi h p e ious ou comes ob ained, using he PMG es ima o .
Table 10. Taking poli ical ins abili y in o accoun .
(1) (2)
VARIABLES PMG PMG
ECT −0.920 −0.912
(0.024) (0.025)
D. REER 0.078 0.088
(0.050) (0.052)
D.TOPEN −0.005 −0.005
(0.011) (0.011)
Sho e m D.SIZE 1.132 1.121
(0.171) (0.172)
D.INFL 0.019 0.019
(0.016) (0.065)
D.PINST −0.011 −0.016
(0.003) (0.004)
D.INFLPINST 0.032
(0.052)
Cons an 0.128 0.133
(0.005) (0.005)
REER −0.023 −0.020
(0.009) (0.009)
TOPEN −0.005 −0.008
(0.006) (0.006)
SIZE −0.022 −0.022
Long e m (0.005) (0.005)
INFL 0.016 0.033
(0.005) (0.010)
PINST 0.007 0.009
(0.001) (0.002)
INFLPINST −0.014
(0.006)
Obse a ions 3150 3150
No es: S anda d e o s in pa en hesis; PMG ¼Pooled Mean G oup.
p<0.01; p<0.05; p<0.1.
Sou ce: Au ho .
COGENT ECONOMICS & FINANCE 17
Conclusion and implica ions
Mone a y in eg a ion o e s ad an ages, such as an op imal alloca ion o esou ces, bu also disad an-
ages, such as he loss o au onomy o na ional mone a y policy. The eg essions sugges a posi i e and
signi ican e ec o mone a y in eg a ion on he BCS, which is consis en wi h he li e a u e (F ankel &
Rose, 1997; Nzimande & Ngalawa, 2017). Howe e , g ea e independence o he mone a y union cen al
bank can o se his loss and ein o ce i s c edibili y. Despi e he pe sis en in la ion ola ili y wi hin
ECOWAS, na owing he in la ion gap be ween coun ies p omo es be e synch oniza ion o business
cycles. Cen al bank independence has a posi i e and signi ican impac on his synch oniza ion, e en i
i does no s eng hen he ela ionship be ween in la ion di e en ials and cycle synch oniza ion. Se e al
ecommenda ions a e made o ensu e he success o mone a y in eg a ion wi hin ECOWAS.
Fi s ly, he es ablishmen o obus su eillance mechanisms is essen ial. This includes he c ea ion o
a amewo k o moni o ing in la ion a es and economic cycles in he membe coun ies. By egula ly
moni o ing hese indica o s, policymake s can quickly iden i y disc epancies and p oac i ely add ess
eme ging issues, he eby p omo ing g ea e egional s abili y.
Secondly, imp o ing communica ion and coo dina ion be ween cen al banks and economic policy-
make s is c ucial. Imp o ed coope a ion can acili a e he exchange o impo an in o ma ion on mone -
a y and iscal policy and p omo e be e coo dina ion o s a egies and esponses o economic
luc ua ions. Regional o ums and mee ings can se e as pla o ms o sha ing insigh s, discussing com-
mon challenges, and o mula ing coo dina ed app oaches o economic managemen .
Thi dly, he p omo ion o policy ha moniza ion be ween membe coun ies is essen ial o p omo ing
con e gence and synch oniza ion o he business cycle. This means ha coun ies a e encou aged o
pu sue compa ible mone a y and iscal policies o achie e common goals such as p ice s abili y and sus-
ainable g ow h. By aligning policy amewo ks, membe s a es can imp o e he e ec i eness o hei
policies and minimize po en ial c oss-bo de spillo e e ec s.
Fou hly, in es men in ins i u ional capaci y is ano he c ucial aspec in p omo ing he synch oniza-
ion o he business cycle wi hin he ECOWAS egion. S eng hening he echnical expe ise and analy -
ical skills o cen al banks and egula o s can imp o e hei abili y o e ec i ely assess and espond o
economic de elopmen s. This can include aining p og ams, capaci y-building ini ia i es, and he in o-
duc ion o ad anced analy ical ools o suppo e idence-based decision-making.
Finally, p omo ing anspa ency and accoun abili y in economic policy is essen ial o building us
and con idence among s akeholde s. By ensu ing ha policy decisions a e based on objec i e da a and
communica ed o he public in a anspa en manne , public au ho i ies can enhance hei c edibili y
and p omo e g ea e adhe ence o sound economic p inciples. T anspa ency p omo es accoun abili y
Table 11. Taking in o accoun al e na i e es ima ion echniques.
De ju e De ac o
(1) (2) (3) (4)
FMOLS DOLS FMOLS DOLS
Dependen a iable BCS BCS BCS BCS
REER −0.050
(0.017)
−0.026
(0.024)
−0.034
(0.014)
0.013
(0.014)
TOPEN 0.016
(0.010)
0.042
(0.016)
0.026
(0.008)
0.024
(0.008)
SIZE −0.018
(0.010)
0.033
(0.007)
0.095
(0.042)
0.041
(0.006)
INFL 0.044
(0.015)
0.093
(0.023)
0.022
(0.009)
−0.021
(0.014)
CBI 0.050
(0.023)
0.099
(0.033)
0.016
(0.003)
0.002
(0.007)
INFLCBI −0.203
(0.067)
−0.330
(0.103)
−0.029
(0.017)
0.119
(0.050)
R-squa ed 0.080 0.789 0.145 0.827
Adjus ed R-squa ed 0.032 0.338 0.082 0.457
No es: S anda d e o s in pa en hesis; PMG ¼Pooled Mean G oup.
p<0.01; p<0.05; p<0.1.
Sou ce: Au ho .
18 L. -J.B. DIENDERE, A. A. DIENDERE, AND J. EGGOH
and enables s akeholde s o assess he e ec i eness o policies and hold policymake s accoun able o
hei ac ions.
In summa y, a mul i-p onged app oach ha includes moni o ing, communica ion, policy ha moniza-
ion, ins i u ional s eng hening, and anspa ency is essen ial o p omo ing he synch oniza ion o he
business cycle and suppo ing sus ainable g ow h in he ECOWAS egion. By implemen ing hese s a -
egies, membe coun ies can wo k oge he o o e come challenges and ealize hei sha ed ision o a
mo e p ospe ous and esilien economic communi y. The bene i s o in eg a ion should be sha ed ai ly,
wi h special conside a ion gi en o coun ies wi h weak and ulne able economies. Well-de eloped and
unded equaliza ion mechanisms should be pu in place o a oid ea s o domina ion in he e en o a
mone a y union. In addi ion, i would be c ucial o s eng hen exis ing ade ag eemen s and de elop
new policies o p omo e egional in eg a ion o acili a e ade ac i i ies and educe mac oeconomic
di e gences be ween ECOWAS economies. The c ea ion o he mone a y union planned o 2027
equi es he implemen a ion o a common s abiliza ion policy ha will make i possible o elimina e
mac oeconomic di e gences and s eng hen egional in eg a ion.
No e
1. h ps://ko .e hz.ch/en/da a/da a-on-cen al-bank-go e no s.h ml.
Au ho s’con ibu ions
Louis-Joel B. Diende e, Achille A. Diende e, and Jude Eggoh a e in ol ed in he concep ion and design, espec i ely
he analysis and in e p e a ion o he da a, he d a ing o he pape , he c i ical e iew o in ellec ual con en , and
he inal app o al o he e sion o be published. Louis-Joel B. Diende e, Achille A. Diende e, and Jude Eggoh ag ee
o be esponsible o all aspec s o he wo k.
Disclosu e s a emen
The au ho s epo ha he e a e no compe ing in e es s o decla e.
Abou he au ho s
Louis-Joel Diende e is a PhD candida e a Thomas Sanka a Uni e si y in Bu kina Faso. He ea ned his Mas e ’s deg ee
om he Uni e si y o Toulon in F ance. His esea ch in e es s include Mac oeconomics, Mone a y Economics, and
In e na ional T ade.
Achille Augus in Diende e is an Associa e P o esso o Economics. He comple ed his doc o al s udies a he
Uni e si y Toulouse 1 Capi ole in F ance and has been a acul y membe a Thomas Sanka a Uni e si y. His esea ch
encompasses De elopmen Economics, Ag icul u al T ade and Ci cula ion, Ag icul u al Resou ces and he
En i onmen , Technology Adop ion and i s Impac s, Food Policy, and Sus ainable De elopmen . He is pa o he
Depa men o Economics and leads a esea ch eam wi hin he Cen e o Economic and Social S udies,
Documen a ion, and Resea ch (CEDRES) a he Uni e si y.
Jude Eggoh is a P o esso o Economics a he Uni e si y o Abomey-Cala i in Benin and also eaches a he
Uni e si y o Ange s in F ance. He ecei ed his Ph.D. in Economics om he Uni e si y o O l
eans in F ance in 2009.
His academic wo k ocuses on Mone a y and Fiscal Policy, Financial Sys ems, G ow h Theo ies, and De elopmen
Economics. He has published o e 30 a icles and se es on he scien i ic commi ees o se e al academic jou nals.
Addi ionally, Jude Eggoh is a scien i ic ad iso o he Minis y o Economy and Finance o Benin and a consul an
o a ious ins i u ions.
ORCID
Louis-Joel Basneouinde Diende e h p://o cid.o g/0000-0002-7096-4943
Achille Augus in Diende e h p://o cid.o g/0000-0002-5477-0567
Jude Eggoh h p://o cid.o g/0000-0002-9550-4820
COGENT ECONOMICS & FINANCE 19
Da a a ailabili y s a emen
The da a ha suppo he indings o his s udy a e a ailable om he co esponding au ho , [a], upon easonable
eques .
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