Modeling Inflation for Mali

IMF Working Papers, December 1, 2007

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Modeling Inflation for Mali

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Bibliographic details

• Authors: Mame Astou Diouf
• Published: December 1, 2007
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451868586.001

Overview

• Author: Mame Astou Diouf
• Publication type: IMF Working Papers, Working Paper No. 2007/295
• Date: December 1, 2007
• Coverage period analyzed: 1979-2006
• Pages: 34
• Volume: 2007; Issue: 295
• DOI: https://doi.org/10.5089/9781451868586.001
• ISBN: 9781451868586
• ISSN: 1018-5941
• Subject keywords: Demand for money, Inflation, Monetary base, Personal income, Real exchange rates
• Keywords: CFA franc, inflation model, price inflation, U.S. dollar, WP

Research question and methodology

• Research question: How is consumer price inflation determined in Mali during 1979-2006 across three macroeconomic explanations?
• The three macroeconomic explanations examined:
  • Monetarist theories, emphasizing the impact of excess money supply.
  • The structuralist hypothesis, stressing the impact of supply-side constraints.
  • External theories, describing the effects of foreign transmission mechanisms on a small open economy.
• Methodology:
  • Use of cointegration techniques.
  • General-to-specific modeling.

Key empirical findings

• Primary long-run determinant:
  • Average national rainfall is found to be the main long-run determinant of inflation.
• Secondary determinants:
  • Deviations from monetary equilibrium are found to affect inflation to a lesser extent.
  • Deviations from external sector equilibrium are found to affect inflation to a lesser extent.
• Time period and data span preserved exactly: 1979-2006.

Policy implications and recommendations

• The paper offers policy recommendations aimed at controlling inflation in Mali, based on the findings that:
  • Supply-side factors (captured by average national rainfall) are central drivers of inflation dynamics.
  • Monetary and external sector equilibria deviations have secondary roles and thus monetary and external policy should account for supply-driven inflation pressures.

Source: Modeling Inflation for Mali, IMF Working Papers 2007, 295 (2007), Mame Astou Diouf.

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• Modeling Inflation for Mali: Mame Astou Diouf; IMF Working Paper 07/295; December 1, 2007
  • Modeling Inflation for Mali: Mame Astou Diouf; IMF Working Paper 07/295; December 1, 2007 (Markdown version)
  • Modeling Inflation for Mali: Mame Astou Diouf; IMF Working Paper 07/295; December 1, 2007 (PDF)