Monetary Growth and Exchange Rate Depreciation As Causes of Inflation in African Countries: An Empirical Analysis
Summary:
This paper examines the relative importance of monetary growth and exchange rate depreciation as causes of inflation in a sample of 10 Sub-Saharan African countries. Causality tests and impulse response functions derived from vector autoregression (VAR) analysis suggest that both monetary expansion and exchange rate adjustments cause inflation in a number of these countries. However, the failure of the tests to attribute the bulk of the variance in inflation in most of the countries to either variable suggests either a problem with the statistical technique or that some other factor--perhaps structural bottlenecks or a measure of overall macroeconomic policy stance incorporating both monetary and exchange rate policy--may be even more important as a determinant of inflation in African countries.
Series:
Working Paper No. 1991/067
Subject:
Consumer price indexes Consumer prices Exchange rate adjustments Exchange rates Foreign exchange Inflation Monetary expansion Monetary policy Prices
English
Publication Date:
July 1, 1991
ISBN/ISSN:
9781451848830/1018-5941
Stock No:
WPIEA0671991
Pages:
49
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