Inflation Dynamics in Madagascar, 1971-2000

 
Author/Editor: Sacerdoti, Emilio ; Xiao, Yuan
 
Publication Date: October 01, 2001
 
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Summary: The paper analyzes the dynamics of inflation in Madagascar in the period 1971-2000, applying cointegration analysis and error correction modeling. The empirical results, based on quarterly data, confirm that there exists a stable money demand relationship, as well as a purchasing power relationship in the long run. The former enters the short-run dynamics of inflation and money growth, while the latter affects the short-run dynamics of the exchange rate only. We also find that an appreciation has a direct negative impact on inflation and that inflation inertia is important. In addition, we conduct FIML estimation of the system and trace the impulse responses to various shocks.
 
Series: Working Paper No. 01/168
Subject(s): Inflation | Madagascar | Demand for money | Exchange rates | Economic models

Author's Keyword(s): Madagascar | inflation | money demand | exchange rate | cointegration | error correction model
 
English
Publication Date: October 01, 2001
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA1682001 Pages: 31
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