Determinants of Inflation in Mozambique

Angel Ubide

No 1997/145, IMF Working Papers from International Monetary Fund

Abstract: Mozambique’s inflation rate was consistently high until 1995, and then plunged in 1996 to 17 percent from 70 percent in 1994. This paper suggests that Mozambique’s inflation pattern is a combination of a “fundamental” trend set by economic policies, seasonal behavior that follows closely that of agriculture, and a collection of irregular events that corresponds mainly to agroclimatic conditions. The empirical results show that the marked tightening of monetary policy in 1996 was the ultimate reason for the control of inflation in 1996, and hence seems to correspond to a change in the “fundamental” trend of inflation that may have long-lasting effects.

Keywords: WP; inflation rate; unobserved components; inflation equation; VAR; inflation transmission mechanism; rand exchange rate; inflation movement; error-correction term; inflation determination; moving average; forecasting inflation; Inflation; Exchange rates; Consumer price indexes; Agricultural production; Purchasing power parity; Africa (search for similar items in EconPapers)
Pages: 36
Date: 1997-10-01
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Citations: View citations in EconPapers (16)

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