Sources of Inflation in Sub-Saharan Africa
February 1, 2007
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Summary
This paper explores the sources of inflation in Sub-Saharan Africa by examining the relationship between inflation, the output gap, and the real money gap. Using heterogeneous panel cointegration estimation techniques, we estimate cointegrating vectors for the production function and the real money demand function to recover the structural output and money gaps for seventeen African countries. The central finding is that both gaps contain significant information regarding the evolution of inflation, albeit with a larger role played by the money gap. There is no significant evidence of asymmetry in the relationship.
Subject: Demand for money, Econometric analysis, Estimation techniques, Inflation, Money, Output gap, Potential output, Prices, Production
Keywords: Cointegration regression, Demand for money, Estimation techniques, excess demand, Growth Accounting, Inflation, inflation movement, integration estimation technique, Money Demand, money demand function, money gap, Output gap, output gap measure, Panel Cointegration, panel money demand estimation, Phillips curve, Phillips Curve Panel GMM, Potential output, Sub-Saharan Africa, WP
Pages:
24
Volume:
2007
DOI:
Issue:
032
Series:
Working Paper No. 2007/032
Stock No:
WPIEA2007032
ISBN:
9781451865967
ISSN:
1018-5941
