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Dynamics of inflation in Sub-Saharan Africa: the role of foreign inflation, official and parallel market exchange rates, and monetary growth

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  • M. O. Odedokun

Abstract

The study investigates the effects of monetary growth; rates of depreciation of domestic currency in both the official and black markets; and foreign inflation rate on domestic (consumer price) inflation in Sub-Saharan Africa. The lags in the effects of these variables are also analysed. Quarterly data over 1980:1 to 1991:4 pooled across 32 countries are employed and separate analyses are conducted for the CFA and non-CFA groups of countries. Our findings suggest that the variables tested for exert significant effects on the inflation rates in the non-CFA countries while only the foreign inflation rate and, to a smaller extent, the rate of depreciation of domestic currency in the parallel market have affected the inflation rates in the CFA countries.

Suggested Citation

  • M. O. Odedokun, 1997. "Dynamics of inflation in Sub-Saharan Africa: the role of foreign inflation, official and parallel market exchange rates, and monetary growth," Applied Financial Economics, Taylor & Francis Journals, vol. 7(4), pages 395-402.
    • Handle: RePEc:taf:apfiec:v:7:y:1997:i:4:p:395-402
    DOI: 10.1080/096031097333501
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    References listed on IDEAS

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    1. Chhibber, Ajay, 1991. "Africa's rising inflation : causes, consequences, and cures," Policy Research Working Paper Series 577, The World Bank.
    2. Chhibber, Ajay & Cottani, Joaquin & Firuzabadi, Reza & Walton, Michael, 1989. "Inflation, price controls, and fiscal adjustment in Zimbabwe," Policy Research Working Paper Series 192, The World Bank.
    3. Anselm London, 1989. "Money, Inflation and Adjustment Policy in Africa: Some Further Evidence," African Development Review, African Development Bank, vol. 1(1), pages 87-111.
    4. Chhibber, Ajay & Shafik, Nemat, 1990. "Exchange reform, parallel markets, and inflation in Africa : the case of Ghana," Policy Research Working Paper Series 427, The World Bank.
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    Cited by:

    1. Mr. Arto Kovanen, 2004. "Zimbabwe: A Quest for a Nominal Anchor," IMF Working Papers 2004/130, International Monetary Fund.
    2. Mr. Joseph Ntamatungiro, 2004. "Fiscal Sustainability in Heavily Indebted Countries Dependenton Nonrenewable Resources: The Case of Gabon," IMF Working Papers 2004/030, International Monetary Fund.
    3. Hicham Ayad, 2020. "Money Supply, Inflation and Economic Growth: Co-Integration and Causality Analysis," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 65(2), pages 29-45, August.

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