Inflation Dynamics in the CEMAC Region

IMF Working Papers, October 1, 2011

Source details

Paper analyses inflation dynamics in the Central African Economic and Monetary Community (CEMAC) using a constructed dataset for country-specific commodity price indices and panel cointegrated vector autoregressive (VAR) models.
Imported commodity price shocks are significant in explaining inflation in the region.
Governments are another driving force of inflation dynamics mainly through controlled prices and the role of capital expenditure in domestic activity.
In most CEMAC countries, the largest effect of global food and fuel prices occurs after four or five quarters in noncore inflation and then decays substantially over time.
Second-round effects are significant only in Cameroon and to a lesser extent in the Republic of Congo.

Imported commodity price shocks play a significant role in regional inflation.
Government actions influence inflation dynamics largely via:
- controlled prices; and
- the role of capital expenditure in domestic activity.
Timing and persistence of global food and fuel price effects:
- Largest effect occurs after four or five quarters in noncore inflation.
- Effects then decay substantially over time.
Second-round (pass-through) effects:
- Significant in Cameroon.
- Present to a lesser extent in the Republic of Congo.
Methodology:
- Constructed dataset for country-specific commodity price indices.
- Panel cointegrated vector autoregressive (VAR) models.

Source: IMF Working Papers — "Inflation Dynamics in the CEMAC Region" (authors and publication details as listed above).