Estimating effects of nominal exchange rates and oil price shocks in the presence of structural breaks

Macroeconomic stability is an objective emerging economy desired to achieve but oil price shocks and fluctuations in nominal exchange rates tend restrain the ability of these economies such macroeconomic balance. Regrettably, are prone have structural breaks defined periods. We therefore, implemented a bivariate diagonal BEKK model, Zivot-Andrews Bai-Perron breakpoint tests evaluate effect presence on developing countries. Break dates were observed for Benin Republic Côte d’Ivoire between 1997M01 1996M09, Gambia 2003M12, Niger 2011M04, Ghana 2000 2008, Nigeria 2020. All break attributed various causes including COVID-19 pandemic, United States (US) invasion Iraq 2003, US recession, Persian Gulf crisis. The findings showed variations prices hostile impact level consumer index (CPI) after controlling all countries excluding Burkina Faso. Hence, conveyed significant instability domestic levels Gambia, Benin, Niger, Ghana, Nigeria. Models inflation should be examined external crises breaks.