ANALYSIS OF INFLATION CONVERGENCE IN THE ECONOMIC COMMUNITY OF WEST AFRICAN STATES (ECOWAS) ZONE (1987-2021)

This study examines the convergence of inflation (country annual average inflation rate) through it determinants vis-a-vis the set convergence criteria in the Economic Community of West African States during the period 1987-2020. The study adopted ex-post factor design in order to answer the research questions. The study undertook unit root test employing Levin, Lin, and Chu (LLC) panel unit root method to check the stationarity of the variables, Auto Regressive Distributed Lag (ARDL) model and Error Correction Model (ECM) to determine whether or not they are co-integrated and a dynamic fixed effect panel data model covering 15 countries over the period under review. The study found that while West African Economic Monetary Union (WAEMU) countries inflation rates fall below the threshold, West African Monetary Zone (WAMZ) inflation rates are beyond the ECOWAS inflation convergence rate of less than or equal to 5 percent, that cross-country differences in inflation rates are attributed to the variation of the output gap, the increase in liquidity, the variation of exchange and interest rates, and the persistent increase in the price level. In the view of targeting the five percent (5 %) percent convergence criterion, the study recommended that Changes of traditional country monetary approaches to a supranational monetary authority that compels compliance to a regional monetary and inflation targets, stimulation of economic growth, lowering of interest rates as well as adoption of a strong and efficient exchange rate mechanism becomes imperative for the ECOWAS member states.