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IS INFLATION ALWAYS AND EVERYWHERE A NON-MONETARY PHENOMENON: EVIDENCE FROM UGANDA

David Kihangire and Albert Mugyenyi
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Albert Mugyenyi: BANK OF UGANDA, RESEARCH DEPARTMENT

International Finance from EconWPA

Abstract: This paper examines the determinants of Uganda’s inflation rate during 1994M7-2005M6. We test the central hypothesis that Uganda’s inflation rate is always and everywhere a non-monetary phenomenon. A theoretical background relating inflation to monetary and other non-monetary factors is first analyzed before a detailed empirical analysis is done. We apply ARDL approach to cointegration methods of analysis due to lack of a pure set of I(0) or I(1) for all the series. The results suggest insufficient evidence to accept the research hypothesis, as Uganda’s inflation rate is significantly correlated with both monetary and non-monetary factors.

Keywords: Uganda; Inflation; exchange rate; exchange rate misalignment; exchange rate variability; terms of trade; rainfall; capacity utilization; interest rates (search for similar items in EconPapers)
JEL-codes: F3 F4 (search for similar items in EconPapers)
Date: 2005-08-27
Note: Type of Document - doc; pages: 15. This is a working paper, which will soon appear in Bank of Uganda Staff Papers, 2005.
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