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Inflation Convergence In East African Countries

Jemma Dridi and Anh Nguyen

MPRA Paper from University Library of Munich, Germany

Abstract: The paper investigates inflation convergence in five East African Countries: Burundi, Kenya, Rwanda, Tanzania, and Uganda, as they aspire to form a monetary union by 2024 under the umbrella of the East African Community. Based on various panel unit root tests, we find that inflation rates in these countries have been converging. An explanation for the convergence is also provided from the perspective of a Global Vector Autoregressive (GVAR) model, which attributes this convergence to a similarity in terms of the nature of shocks affecting EAC countries as well as the role of foreign factors as drivers of inflation given that inflation has been low and less volatile in industrial and emerging countries since the early 1990s.

Keywords: Inflation; Global VAR (GVAR); Panel Unit Root Tests; Spillovers; East African Community. (search for similar items in EconPapers)
JEL-codes: C32 C33 E31 F40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Date: 2017-07
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https://mpra.ub.uni-muenchen.de/80393/1/MPRA_paper_80393.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/80416/1/MPRA_paper_80393.pdf revised version (application/pdf)

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