This study investigates the impact of monetary policy shocks in two regimes of the business cycles (contractionary and expansion regimes) in 4 countries in the West African monetary zone (WAMZ). It employs the Markov switching model, using quarterly data for the period 1980Q1 to 2020Q4. Our findings show that the countries have common business cycles. In addition, the study offered enough evidence that the significant effects of the monetary instruments are significantly more potent in contractionary than expansionary regimes. Furthermore, on the aggregate, the zone appears to have an average business cycle ranging from 9.8 to 32.3 quarters, varying from country to country and comparatively shorter than the industrial countries. Hence, the designing of policies by the monetary authorities in this region should be tailored to shorten the duration of the contractionary period and must be meticulously formulated to avert the negative consequences of strict contractionary policy and ditto to expansionary policy.

The study analyzed the impact of monetary policy shocks on economic growth in 12 countries of the Economic Community of West African States (ECOWAS), using quarterly data from 1980(1) to 2017(4). We employed a Panel Structural Vector Autoregressive (Panel SVAR) for the modeling of monetary policy transmission shock in the segregated sub-regions of WAMZ and WAEMU. The key results suggest that fluctuations of the monetary policy do not have significant effects on the economic growth but significantly impact the general price level. Moreover, the study finds that the exchange rate is persistently a vital mechanism that significantly influences the variables of the real economy. Our estimates further suggest that there is idiosyncratic evidence found in the results, which is the anomaly of the Price puzzle.