Inflation in African Countries: General Issues and Effecton the Financial Sector

International Monetary Fund

No 1989/086, IMF Working Papers from International Monetary Fund

Abstract: Since the mid-1970s the annual inflation rate in Africa has averaged more than 15 percent, with many countries experiencing rates of 20 percent or more. Inflation rates of this magnitude have significant adverse effects on the financial sectors of African countries, particularly in the context of fixed nominal interest rates. Econometric analysis points strongly to monetary expansion as a major cause of inflation in African countries generally. Exchange rate depreciation is also associated with higher inflation, although in some countries the domestic currency was depreciated to offset the effects of recent inflation, rather than being a cause of inflation.

Keywords: WP; inflation rate; rising prices; rate of inflation; exchange rate; high-inflation country; budget deficit; low-inflation environment; Reduced-Form inflation regression; Inflation; Nominal effective exchange rate; Government debt management; Exchange rates; Monetary expansion; Africa; Sub-Saharan Africa (search for similar items in EconPapers)
Pages: 22
Date: 1989-01-01
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