## Determinants of Inflation in Mozambique

_IMF Working Papers, October 1, 1997_

## Source details

**Canonical URL:** [Determinants of Inflation in Mozambique](https://www.imf.org/en/publications/wp/issues/2016/12/30/determinants-of-inflation-in-mozambique-2372)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/30/determinants-of-inflation-in-mozambique-2372/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/30/determinants-of-inflation-in-mozambique-2372/index.json)
- [Bundle manifest](/en/publications/wp/issues/2016/12/30/determinants-of-inflation-in-mozambique-2372/bundle-manifest.json)

## 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**
  - [Determinants of Inflation in Mozambique - WP/97/145 (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/_wp97145.pdf.md){rel="alternate" type="text/markdown"}
  - [Determinants of Inflation in Mozambique - WP/97/145 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/_wp97145.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/determinants-of-inflation-in-mozambique-2372_