IMF Working Papers

Inflation and Monetary Policy in a Low-Income and Fragile State: The Case of Guinea

By Yan Carriere-Swallow, Nelnan Fidèle Koumtingué, Sebastian Weber

April 21, 2023

Download PDF

Preview Citation

Format: Chicago

Yan Carriere-Swallow, Nelnan Fidèle Koumtingué, and Sebastian Weber. Inflation and Monetary Policy in a Low-Income and Fragile State: The Case of Guinea, (USA: International Monetary Fund, 2023) accessed November 23, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Inflation in low-income countries is often high and volatile, driven by external shocks. In addition, inflation in fragile states is affected by highly volatile domestic factors that complicate monetary policy’s ability to deliver price stability. We estimate the drivers of inflation in Guinea since the early 2000s, a period in which the country suffered major shocks from pandemics, commodity price movements, and multiple military coups, and during which inflation averaged 12 percent. Results confirm that global commodity and transport prices account for a large share of the variation in inflation. The contribution of monetary policy shocks to inflation is moderate, reflecting its broadly neutral stance throughout most of the last two decades. However, monetary policy has occasionally made larger contributions to inflation, and recently helped contain price pressures from high commodity prices. The effectiveness of monetary policy reflects a strong relationship between monetary aggregates and the exchange rate.

Keywords: Fragile States, Inflation, Low-income Countries, Monetary Policy

Publication Details

  • Pages:

    31

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2023/084

  • Stock No:

    WPIEA2023084

  • ISBN:

    9798400241277

  • ISSN:

    1018-5941