Sources of Inflation in Sub-Saharan Africa

Author/Editor:

Shanaka J Peiris ; Régis Barnichon

Publication Date:

February 1, 2007

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper explores the sources of inflation in Sub-Saharan Africa by examining the relationship between inflation, the output gap, and the real money gap. Using heterogeneous panel cointegration estimation techniques, we estimate cointegrating vectors for the production function and the real money demand function to recover the structural output and money gaps for seventeen African countries. The central finding is that both gaps contain significant information regarding the evolution of inflation, albeit with a larger role played by the money gap. There is no significant evidence of asymmetry in the relationship.

Series:

Working Paper No. 2007/032

Subject:

Demand for money Econometric analysis Estimation techniques Inflation Money Output gap Potential output Prices Production

English

Publication Date:

February 1, 2007

ISBN/ISSN:

9781451865967/1018-5941

Stock No:

WPIEA2007032

Pages:

24

Please address any questions about this title to publications@imf.org