Determinants of Inflation in Mozambique
IMF Working Papers, October 1, 1997
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Bibliographic details
- Authors: Angel J. Ubide
- Published: October 1, 1997
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451856507.001
Summary
- Mozambique’s inflation rate was consistently high until 1995, and then plunged in 1996 to 17 percent from 70 percent in 1994.
- The paper suggests Mozambique’s inflation pattern is a combination of:
- a “fundamental” trend set by economic policies,
- seasonal behavior that follows closely that of agriculture,
- and a collection of irregular events that corresponds mainly to agroclimatic conditions.
- The empirical results show that the marked tightening of monetary policy in 1996 was the ultimate reason for the control of inflation in 1996, and hence seems to correspond to a change in the “fundamental” trend of inflation that may have long-lasting effects.
Empirical findings and methodology
- Inflation dynamics decomposed into:
- fundamental trend driven by economic policy,
- seasonal agricultural-driven component,
- irregular agroclimatic-driven shocks.
- Empirical result highlighted:
- marked tightening of monetary policy in 1996 as the proximate cause of the 1996 decline in inflation.
- Methodological and technical terms referenced:
- error-correction term, moving average, unobserved components, VAR.
Policy implications and interpretation
- Tightening monetary policy can shift the “fundamental” trend of inflation with potentially long-lasting effects.
- Seasonality linked to agriculture and agroclimatic shocks implies that agricultural production and related policies are important for understanding short-run inflation movements.
Subjects and keywords
- Subject: Agricultural production, Consumer price indexes, Exchange rates, Foreign exchange, Inflation, Monetary base, Prices, Production, Purchasing power parity
- Keywords: Africa, Agricultural production, Consumer price indexes, error-correction term, Exchange rates, forecasting inflation, Inflation, inflation determination, inflation equation, inflation movement, inflation rate, inflation transmission mechanism, moving average, Purchasing power parity, rand exchange rate, unobserved components, VAR, WP
Source: IMF Working Papers — "Determinants of Inflation in Mozambique" by Angel J. Ubide, October 1, 1997.
Content in this bundle
- Determinants of Inflation in Mozambique - WP/97/145