Inflation and Monetary Pass-Through in Guinea

Rodolphe Blavy

No 2004/223, IMF Working Papers from International Monetary Fund

Abstract: The paper analyzes the dynamics of inflation in Guinea during 1992-2003 applying cointegration and error-correction modeling to a bivariate model that includes consumer price and monetary variables. The empirical results, based on quarterly data, confirm the existence of a long-run relationship between money supply and consumer prices. This paper argues further that the pass-through has increased in recent years. Short-term dynamics are shown to accentuate the long-run impact. Impulse response analysis shows that a shock in the money stock will have an increasing impact over two years and will then stabilize at a higher level.

Keywords: WP; money growth; money-inflation relationship; price level; Guinea; inflation; money supply; cointegration; error correction model; inflation inertia; inflation variable; inflation equation; consumer price inflation; inflation expectation; Monetary base; Consumer price indexes; Demand for money; Consumer prices; Sub-Saharan Africa; error-correction modeling; vector error correction; consumer price index market basket (search for similar items in EconPapers)
Pages: 20
Date: 2004-12-01
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Citations: View citations in EconPapers (12)

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