Economic Integration and Macroeconomic Stability in ECOWAS Countries: Evidence on Inflation

This study investigates the impact of economic integration on inflation dynamics within the Economic Community of West African States (ECOWAS). Using a panel of 10 ECOWAS countries, which are Nigeria, Ghana, Senegal, Sierra Leone, The Gambia, Liberia, Togo, Guinea-Bissau, Benin, and Côte d’Ivoire, the study examines how trade, financial, and institutional integration influence inflation in both the short and long run. The results show that financial and institutional integration significantly reduces inflation both in the short and long run. This suggests that development and an increase in cross-border asset flows, regulatory quality, and governance stabilize domestic prices. Conversely, trade integration shows no statistically significant impact on inflation in the short and long run, which could be attributed to structural limitations such as limited export diversification and reliance on imports. Overall, the study underscores that economic integration in ECOWAS exerts differentiated effects on inflation depending on the dimension considered. It concludes that strengthening financial and institutional integration, alongside productive investment, is critical for achieving sustainable price stability in the region.