Strengthening Inflation Forecasting in São Tomé and Príncipe
Selected Issues Papers, July 16, 2025
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- Canonical URL
- Strengthening Inflation Forecasting in São Tomé and Príncipe
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Bibliographic details
- Authors: Alsis Cruz, Dilson Tiny, Bahrom Shukurov
- Published: July 16, 2025
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229022712.018
Summary and purpose
- Examines the drivers of inflation in São Tomé and Príncipe and develops a model for forecasting it.
- Finds that both supply and demand factors contribute to inflation in the country.
- Concludes that to effectively reduce and manage inflation, a comprehensive policy mix must address both supply and demand factors.
Key findings on inflation drivers
- Supply-side factors:
- Inflation inertia.
- Import food prices.
- Global or regional crises.
- Demand-side factors:
- Weakened macroeconomic discipline in the leadup to elections (demand shocks).
- Overall assessment:
- Both supply and demand shocks are important for inflation dynamics in São Tomé and Príncipe.
Methodology and technical approach
- Forecasting framework:
- Uses an Autoregressive Distributed Lag (ARDL) model (keyword explicitly listed: Autoregressive Distributed Lag (ARDL) model).
- Relevant technical concepts highlighted:
- Inflation inertia.
- Nominal effective exchange rate.
- Pegged exchange rate regime.
- VAT impact and value-added tax considerations.
Policy implications and recommendations
- A comprehensive policy mix is required to effectively reduce and manage inflation.
- Policy design should explicitly address:
- Supply-side measures to mitigate imported food-price shocks and to strengthen resilience to global/regional crises.
- Demand-side measures to maintain macroeconomic discipline, particularly around electoral periods.
Publication and metadata
- Authors: Alsis Cruz, Dilson Tiny, Bahrom Shukurov
- Date: July 16, 2025
- Series: Selected Issues Paper No. 2025/116
- Pages: 20
- Volume: 2025
- Issue: 116
- DOI: https://doi.org/10.5089/9798229022712.018
- Stock No: SIPEA2025116
- ISBN: 9798229022712
- ISSN: 2958-7875
- Subject and keywords: Economic forecasting; Exchange rate arrangements; Foreign exchange; Inflation; Nominal effective exchange rate; Prices; Taxes; Value-added tax; Autoregressive Distributed Lag (ARDL) model; inflation inertia; pegged exchange rate regime; policy mix; São Tomé and Príncipe; supply and demand shocks; VAT impact
Source: "Strengthening Inflation Forecasting in São Tomé and Príncipe", Selected Issues Papers 2025/116, July 16, 2025. DOI: https://doi.org/10.5089/9798229022712.018
Content in this bundle
- Sipea2025116