Successful inflation targeting in Mozambique despite vulnerability to internal and external shocks

Per-Åke Andersson () and Bo Sjö
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Per-Åke Andersson: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O. Box 640, SE 40530 GÖTEBORG, Sweden
Bo Sjö: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: Box 640, SE 40530 GÖTEBORG

No 544, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: Inflation has proven to be an important obstacle to successful economic adjustment in many countries. Despite both internal and external shocks to the economy, Mozambique has succeeded in controlling the inflation to gain high economic growth. This paper provides an econometric analysis of the dynamics behind the experience of Mozambique. Inflation is driven by both a purchasing power parity relation with South Africa and monetary factors. The result indicates that the country is using a crawling peg exchange rate regime.

Keywords: inflation; purchasing power parity; money market; VAR model (search for similar items in EconPapers)
JEL-codes: C32 E31 E50 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2012-10-02
New Economics Papers: this item is included in nep-afr and nep-mon
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