Fiscal Dominance and Inflation in the Democratic Republic of the Congo

 
Author/Editor: Nachega, Jean-Claude
 
Publication Date: November 01, 2005
 
Electronic Access: Free Full text (PDF file size is 200KB).
Use the free Adobe Acrobat Reader to view this PDF file

 
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: This paper examines the fiscal dominance hypothesis in the Democratic Republic of the Congo (DRC) during 1981-2003, using multivariate cointegration analysis and vector errorcorrection modeling. Empirical results point to strong and statistically significant long-run relationships between budget deficits and seigniorage, and between money creation and inflation. The long-run inflationary impact of budget deficits is robust to the inclusion of output growth or velocity in the inflation and monetary growth equations. The paper offers some policy recommendations for long-term price stability in the DRC.
 
Series: Working Paper No. 05/221
Subject(s): Inflation | Congo, Democratic Republic of the | Fiscal policy | Economic stabilization

Author's Keyword(s): Congo | inflation | fiscal policy | stabilization in developing countries
 
English
Publication Date: November 01, 2005
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA2005221 Pages: 44
Price:
US$15.00 (Academic Rate:
US$15.00 )
 
 
Please address any questions about this title to publications@imf.org