Working Paper 305 - Inflation Dynamics In Post-Secession Sudan
Suwareh Darbo () and
Amandine Nakumuryango ()
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Suwareh Darbo: African Development Bank, Postal: 15 Avenue du Ghana P.O.Box 323-1002 Tunis-Belvedère, Tunisia, https://www.afdb.org/en/knowledge/publications
Amandine Nakumuryango: African Development Bank, Postal: 15 Avenue du Ghana P.O.Box 323-1002 Tunis-Belvedère, Tunisia, https://www.afdb.org/en/knowledge/publications
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The objective of this working paper is to investigate the factors contributing to inflation in Sudan in the wake of South Sudan’s secession, which resulted in the loss of 75% of the country’s oil exports. The paper uses a single equation model in a Vector Error Correction Model (VECM) to investigate the determinants of inflation. The independent variables included in the model are money supply, the nominal effective exchange rate based on the parallel rate, credit to the private sector as a percentage of GDP, and crude oil prices. The results indicate that, in the long run, oil prices have a negative effect on inflation while money supply, credit to private sector, and nominal effective exchange rate have positive effects. This underscores the need to manage money supply, the exchange rate, and credit to the private sector, all of which can be influenced by the monetary authorities—that is, the Central Bank of Sudan.JEL classification: E310 E520 E58Keywords: Inflation, money supply, exchange rate, credit, oil prices Sudan, long-run, VECM.
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