Modeling Inflation in the WAEMU's Zone

Moon Oulatta

MPRA Paper from University Library of Munich, Germany

Abstract: This paper introduces a simple AS-AD model to examine the determinants of inflation for the members of the West African Economic and Monetary Union (WAEMU). On the supply side, we found France's inflation, rainfall, and real crude oil inflation to be the most important drivers of domestic inflation. On the demand side, we found the output gap to be a significant determinant of domestic inflation. Given the estimated size of the effect of the output gap on inflation, we can conclude that the short-run aggregate supply curve may be relatively flat; bolstering the Keynesian view that monetary policy could be extremely effective in stabilizing output in the short-run.

Keywords: Inflation; Two Stage Least Squares; Monetary policy; BCEAO (search for similar items in EconPapers)
JEL-codes: C36 E31 E52 (search for similar items in EconPapers)
Date: 2016-11-20
New Economics Papers: this item is included in nep-mac and nep-mon
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https://mpra.ub.uni-muenchen.de/89300/9/MPRA_paper_82983.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/92894/9/MPRA_paper_82983.pdf revised version (application/pdf)

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