Sources of Inflation in Sub-Saharan Africa

Shanaka Peiris and Régis Barnichon

No 2007/032, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; money gap; excess demand; Inflation; Phillips curve; Money Demand; Panel Cointegration; Growth Accounting; panel money demand estimation; money demand function; Phillips Curve Panel GMM; inflation movement; output gap measure; Output gap; Demand for money; Potential output; Estimation techniques; Sub-Saharan Africa; integration estimation technique; Cointegration regression (search for similar items in EconPapers)
Pages: 24
Date: 2007-02-01
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Citations: View citations in EconPapers (8)

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