Working Paper 152 - Dynamics of Inflation in Uganda

Alain Kabundi (akabundi@imf.org)

Working Paper Series from African Development Bank

Abstract: This study identifies main factors underlying inflation in Uganda, both in the long - and short-rung, using monthly data from January 1999 to October 2011. It uses a single-equation Error Correction Model (ECM) based on the quantity theory of money including both external and domestic variables. The main finding is that both external and domestic factors explain dynamics in inflation in Uganda. Over the long-run, monetary aggregate, world food prices, and domestic supply and demand effects in agricultural sector are main determinants of inflation in Uganda. While money growth, world food prices, and energy prices, combined with domestic food prices have short-term impact on inflation. Finally, the study finds evidence of inflation inertia which can be attributed to expectations of agents and/or inflation persistence.

Date: 2012-09-10
New Economics Papers: this item is included in nep-afr, nep-dev and nep-mon
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Citations: View citations in EconPapers (22)

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Persistent link: https://EconPapers.repec.org/RePEc:adb:adbwps:401

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