The pass-through effect of exchange rate in the ECOWAS: Empirical evidence from the ARDL panel model

The pass-through effect of exchange rate in the ECOWAS: Empirical evidence from the ARDL panel model | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article The pass-through effect of exchange rate in the ECOWAS: Empirical evidence from the ARDL panel model Mouhamed SECK This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7574197/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This paper investigates the effect of the exchange rate, in relation to the type of exchange rate regime, on inflation rates in ECOWAS. To this end, we assess the impact of the exchange rate on inflation (ERPT) by distinguishing between countries with a fixed exchange rate regime (WAEMU and Cabo Verde) and countries with a f lexible exchange rate regime (WAMZ). Applying the ARDL panel model, the results obtained from estimating the ERPT show an incomplete pass-through effect for the ECOWAS countries, the WAEMU and Cabo-Verde countries, and for the WAMZ countries. For fixed exchange rate countries, the exchange rate pass-through is positive and significant in the short term. In fact, a real appreciation of the exchange rate of 1% leads to an increase in the price level in the WAEMU and Cape Verde of 0.20% in the short term and 0.16% in the long term, which is not significant. For countries with a flexible exchange rate, the significant effect of the pass-through is noted in the short and long term. A 1% loss of competitiveness leads to inflation of 0.13% in the short term and disinflation of 0.8% in the long term. JEL classification: F31; E31; F15; C23; N17 International Economics Macroeconomics Exchange rate pass-through Inflation Monetary union ARDL panel ECOWAS Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-7574197","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":513064487,"identity":"339b0b27-4f67-4c77-a18f-9178f8495932","order_by":0,"name":"Mouhamed SECK","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAABFUlEQVRIiWNgGAWjYHACNhDB2NgAog7YgEgDqCABLc0QLWkkaGmHaDlMWItue4/Zg585NrK9DewPH/w4cz6xv/3wBoYPZYcZ5Gc3YNViduaMuWHvtjTjmQ08xoY9N24nzjiTVsA449xhBoM7B7BruZFjJsG77XDixgYeNmmGD7cTNzDkGDDztgG1SCTg1CL5d9v/xP0H2J//ZvhwLnED/xsD5r9ALfIzcGuR5t12IBEYyGbMDDcOJG6QANrCCNTCcAOHljPHyqRltyUbNzbzGEv2nEk2nnHjWcHBnnPpPAa4tBxv3ib5dpudbGN7+8MPP47Zyfb3J2988KPMWg6XwxCAGYl9AIh5CKgfBaNgFIyCUYAHAADYjWjYJjgXYAAAAABJRU5ErkJggg==","orcid":"https://orcid.org/0009-0001-4604-969X","institution":"Cheikh anta Diop University of Dakar","correspondingAuthor":true,"prefix":"","firstName":"Mouhamed","middleName":"","lastName":"SECK","suffix":""}],"badges":[],"createdAt":"2025-09-09 13:11:20","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-7574197/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-7574197/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":91061298,"identity":"cd9be91d-c437-49ec-989d-e8d073526108","added_by":"auto","created_at":"2025-09-11 09:04:23","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":310443,"visible":true,"origin":"","legend":"","description":"","filename":"ThePassThroughEffectofExchangeRateintheECOWASEmpiricalEvidencefromtheARDLPanelModel.pdf","url":"https://assets-eu.researchsquare.com/files/rs-7574197/v1_covered_d2c7a40c-0df1-4525-8fc8-4d4c87c591e5.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003eThe pass-through effect of exchange rate in the ECOWAS: Empirical evidence from the ARDL panel model\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"Cheikh Anta Diop University","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":" Exchange rate pass-through, Inflation, Monetary union, ARDL panel, ECOWAS","lastPublishedDoi":"10.21203/rs.3.rs-7574197/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-7574197/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis paper investigates the effect of the exchange rate, in relation to the type \u0026nbsp;of exchange rate regime, on inflation rates in ECOWAS. To this end, we assess the \u0026nbsp;impact of the exchange rate on inflation (ERPT) by distinguishing between countries \u0026nbsp;with a fixed exchange rate regime (WAEMU and Cabo Verde) and countries with a \u0026nbsp;f \u0026nbsp;lexible exchange rate regime (WAMZ). Applying the ARDL panel model, the results \u0026nbsp;obtained from estimating the ERPT show an incomplete pass-through effect for the \u0026nbsp;ECOWAS countries, the WAEMU and Cabo-Verde countries, and for the WAMZ \u0026nbsp;countries. For fixed exchange rate countries, the exchange rate pass-through is \u0026nbsp;positive and significant in the short term. In fact, a real appreciation of the exchange \u0026nbsp;rate of 1% leads to an increase in the price level in the WAEMU and Cape Verde of \u0026nbsp;0.20% in the short term and 0.16% in the long term, which is not significant. For \u0026nbsp;countries with a flexible exchange rate, the significant effect of the pass-through is \u0026nbsp;noted in the short and long term. A 1% loss of competitiveness leads to inflation of \u0026nbsp;0.13% in the short term and disinflation of 0.8% in the long term.\u003c/p\u003e\n\u003cp\u003eJEL classification: F31; E31; F15; C23; N17\u003c/p\u003e","manuscriptTitle":"The pass-through effect of exchange rate in the ECOWAS: Empirical evidence from the ARDL panel model","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2025-09-11 08:56:16","doi":"10.21203/rs.3.rs-7574197/v1","editorialEvents":[{"type":"communityComments","content":0}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true}}],"origin":"","ownerIdentity":"aac6ef8b-34b5-4d86-b2ca-70515aa3f6f0","owner":[],"postedDate":"September 11th, 2025","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"posted","subjectAreas":[{"id":54502625,"name":"International Economics"},{"id":54502626,"name":"Macroeconomics"}],"tags":[],"updatedAt":"2025-09-11T08:56:16+00:00","versionOfRecord":[],"versionCreatedAt":"2025-09-11 08:56:16","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-7574197","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-7574197","identity":"rs-7574197","version":["v1"]},"buildId":"8U1c8b4HqxoKbykW_rLl7","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}