Domestic and External Drivers of Inflation: The Gambia

By Jean-Claude Nachega, Glen Kwende, Laurent Kemoe, Fidel A MÃ¡rquez Barroeta

February 15, 2024

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Format: Chicago

Jean-Claude Nachega, Glen Kwende, Laurent Kemoe, and Fidel A MÃ¡rquez Barroeta. Domestic and External Drivers of Inflation: The Gambia, (USA: International Monetary Fund, 2024) accessed December 21, 2024

Summary

This paper investigates the drivers of headline inflation and the degree of exchange rate passthrough (ERPT) in The Gambia over the period 2014-2023. The analysis highlights the decisive long-term roles of global prices of commodities (food, oil and fertilizer), the exchange rate, and the domestic output gap. The short-run dynamics of inflation points to the roles of global food price and the second-round effects of changes in food prices and the output gap. Monetary policy has the potential to tame inflation in the short run provided the monetary policy rate is adjusted rapidly and boldly. Lastly, there is evidence of an asymmetric ERPT to domestic prices, and the size of currency depreciation matters for inflation dynamics.

Subject: Central bank policy rate, Exchange rates, Financial services, Food prices, Foreign exchange, Inflation, International organization, Monetary policy, Output gap, Prices, Production

Keywords: Central bank policy rate, Drivers of inflation, Exchange rates, Fertilizer prices, Food prices, Global, Inflation, Inflation dynamics, Inflation point, Monetary policy rate, Oil prices, Output gap, Points to the role

Publication Details

Pages:

15
Volume:

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DOI:

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Issue:

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Series:

Selected Issues Paper No. 2024/004
Stock No:

SIPEA2024004
ISBN:

9798400267796
ISSN:

2958-7875

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