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Persistence of Inflationary Shocks: Implications for West African Monetary Union Membership

Paul Alagidede (), Simeon Coleman () and Juan Cuestas

NBS Discussion Papers in Economics from Economics, Nottingham Business School, Nottingham Trent University

Abstract: Plans are far advanced to form a second monetary union, the West African Monetary Zone (WAMZ), in Africa. While much attention is being placed on convergence criteria and preparedness of the five aspiring member states, less attention is being placed on how the dynamics of inflation in individual countries are (dis)similar. This paper aims to stimulate debate on the long term sustainability of the union by examining the dynamics of inflation within these countries. Using Fractional Integration (FI) methods, we establish that some significant differences exist among the countries. Shocks to inflation in Sierra Leone are non mean reverting; results for The Gambia, Ghana and Guinea-Bissau suggest some inflation persistence, despite being mean reverting. Some policy implications are discussed and possible outstanding policy questions are also raised.

Keywords: Inflationary shocks; fractional integration; stationarity; West Africa; Monetary unions. (search for similar items in EconPapers)
JEL-codes: C14 E31 E58 (search for similar items in EconPapers)
Date: 2010-11
New Economics Papers: this item is included in nep-afr, nep-cba and nep-mon
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http://www.ntu.ac.uk/__data/assets/pdf_file/0013/3 ... lationary-shocks.pdf First version, 2010 (application/pdf)

Related works:
Working Paper: Persistence of Inflationary shocks: Implications for West African Monetary Union Membership (2010) Downloads
Working Paper: Persistence of Inflationary shocks: Implications for West African Monetary Union Membership (2010) Downloads
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