Assessing the Money, Exchange Rate, Price Links during Hyperinflationary Episodes in the Democratic Republic of the Congo
Development and Comp Systems from EconWPA
The determination of the causal pattern among inflation, money growth, and exchange rate has important implications for policymakers regarding appropriate stabilization policies in developing economies. Using Congolese data where the pace of broad money growth and hyperinflation (23,760% annual change) reached record levels in early 1990s, we use single−equation multivariate autoregressive models with the optimal lag selected using Hsiao fs approach to Granger causality. Results indicate feedback causality between inflation and money growth on one side, and unidirectional Granger causality from money growth to the exchange rate and from the exchange rate to inflation on the other. These results suggest that the over−riding goal of disinflation needs to be accomplished initially by exchange rate stabilization, followed by a direct inflation targeting.
Keywords: Congo; Inflation; Hsiao's; version; of; Granger; Causality (search for similar items in EconPapers)
JEL-codes: O P (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-mon
Note: Type of Document - pdf; pages: 12. Inflation in the DR Congo
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Journal Article: Assessing the Money, Exchange Rate, Price Links during Hyperinflationary Episodes in the Democratic Republic of the Congo (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpdc:0511023
Access Statistics for this paper
More papers in Development and Comp Systems from EconWPA
Series data maintained by EconWPA ().