IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/23542.html
   My bibliography  Save this paper

Effets Non Linéaires de l'Inflation sur la Croissance dans l'UEMOA
[Nonlinear Effects of Inflation on Growth in the WAEMU]

Author

Listed:
  • Combey, Adama
  • Nubukpo, Kako

Abstract

The monetary policy conducted by the Central Bank of West African States (BCEAO) faces many challenges, including the need to fight against inflation, which is driven mainly by the volatility of commodity prices on international markets. It is also fall to common criticisms about the lack of economic growth objective in her mandate as developing countries central bank in among the poorest in the world. It therefore not immune to reflection on the existence of a dilemma "inflation-growth" it would, consciously or unconsciously involved. The aim of this paper is to demonstrate the existence of a non-linear relationship between inflation and the economic growth within the West African Economic and Monetary Union (WAEMU) and to determine the inflation threshold at which a trade-off between inflation and growth is effective. From a threshold effects dynamic panel model, the study shows that the optimal level of inflation in the WAEMU zone is 8.08%. This result raises the question of the relevance of the standard deduction of 3% under the convergence criteria of the WAEMU zone. In addition, the inclusion of such a result is likely to help the BCEAO in the definition and conduct of monetary policy.

Suggested Citation

  • Combey, Adama & Nubukpo, Kako, 2010. "Effets Non Linéaires de l'Inflation sur la Croissance dans l'UEMOA [Nonlinear Effects of Inflation on Growth in the WAEMU]," MPRA Paper 23542, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:23542
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/23542/2/MPRA_paper_23542.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hansen, Bruce E., 1999. "Threshold effects in non-dynamic panels: Estimation, testing, and inference," Journal of Econometrics, Elsevier, vol. 93(2), pages 345-368, December.
    2. Atish Ghosh & Steven Phillips, 1998. "Warning: Inflation May Be Harmful to Your Growth," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 672-710, December.
    3. Kako Kossivi Nubukpo, 2007. "L'efficacité de la Politique Monétaire en Situation d'Incertitude et d'Extraversion: Le Cas de l'Union Economique et Monétaire Ouest Africaine (UEMOA)," The European Journal of Development Research, Taylor and Francis Journals, vol. 19(3), pages 480-495.
    4. João R. Faria & Francisco Galrão Carneiro, 2001. "Does High Inflation Affect Growth in the Long and Short Run?," Journal of Applied Economics, Universidad del CEMA, vol. 4, pages 89-105, May.
    5. Hansen, Bruce E, 1996. "Inference When a Nuisance Parameter Is Not Identified under the Null Hypothesis," Econometrica, Econometric Society, vol. 64(2), pages 413-430, March.
    6. David, Drukker & Pedro, Gomis-Porqueras & Paula, Hernandez -erme, 2005. "Threshold effects in the relationship between inflation and growth: a new panel-data approach," MPRA Paper 38225, University Library of Munich, Germany.
    7. Sylviane GUILLAUMONT JEANNENEY, 2004. "Bilan de l'intégration monétaire dans l'UMOA," Working Papers 200418, CERDI.
    8. Guillermo A. Calvo & Fabrizio Coricelli, 1993. "Output Collapse in Eastern Europe: The Role of Credit," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 32-52, March.
    9. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 1127-1170.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. LONZO LUBU, Gastonfils & AVOM, Desiré, 2014. "Les Effets Non Lineaires Des Dépenses Publiques Sur La Croissance Économique En Rd Congo [Nonlinear Effects Of Spending On Economic Growth In Dr Congo]," MPRA Paper 60716, University Library of Munich, Germany.
    2. Issiaka Coulibaly, 2014. "Competitiveness and growth within the CFA franc zone: Does the switch to the Euro matter?," International Economics, CEPII research center, issue 139, pages 1-18.
    3. Issiaka Coulibaly, 2013. "Competitiveness and growth within the CFA franc zone: does the switch to the euro matter?," Erudite Working Paper 2013-04, Erudite.
    4. repec:cii:cepiei:2014-q3-139-1 is not listed on IDEAS
    5. DJAHINI, Edém, 2015. "Les principaux déterminants de la compétitivité internationale en Afrique Sub-saharienne [The main determinants of international competitiveness in Sub-Saharan Africa]," MPRA Paper 65024, University Library of Munich, Germany, revised 16 Jun 2015.
    6. Jean C. Kouam & Simplice A. Asongu, 2022. "The Relevance of an Optimal Policy Mix in the CEMAC zone," Working Papers 22/098, European Xtramile Centre of African Studies (EXCAS).
    7. Ngomba Bodi, Francis Ghislain & Tadadjeu Wemba, Dessy-Karl & Soulemanou, Soulemanou, 2020. "Transparence des Banques Centrales et efficacité de la politique monétaire : quelles implications pour la Banque des Etats de l’Afrique Centrale ? [Central Bank's Transparency and effectiveness of ," MPRA Paper 116436, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Waseem Khadim & Saddam Ilyas & Bilal Mehmood, 2016. "Of Inflation and Growth Nexus in BRIMC Economies," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 4(1), pages 32-45, January.
    2. Samaresh Bardhan & Rajesh Sharma & Vivekananda Mukherjee, 2019. "Threshold Effect of Bank-specific Determinants of Non-performing Assets: An Application in Indian Banking," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 18(1_suppl), pages 1-34, April.
    3. Samir Ghazouani, 2012. "Threshold Effect of Inflation on Growth: Evidence from MENA Region," Working Papers 715, Economic Research Forum, revised 2012.
    4. Seleteng, Monaheng & Bittencourt, Manoel & van Eyden, Reneé, 2013. "Non-linearities in inflation–growth nexus in the SADC region: A panel smooth transition regression approach," Economic Modelling, Elsevier, vol. 30(C), pages 149-156.
    5. Manamba EPAPHRA, 2016. "Nonlinearities in Inflation and Growth Nexus: The Case of Tanzania," Journal of Economics and Political Economy, KSP Journals, vol. 3(3), pages 471-512, September.
    6. David, Drukker & Pedro, Gomis-Porqueras & Paula, Hernandez -erme, 2005. "Threshold effects in the relationship between inflation and growth: a new panel-data approach," MPRA Paper 38225, University Library of Munich, Germany.
    7. Jesús Crespo Cuaresma & Maria Silgoner, 2014. "Economic Growth and Inflation in Europe: A Tale of Two Thresholds," Journal of Common Market Studies, Wiley Blackwell, vol. 52(4), pages 843-860, July.
    8. Salwa TRABELSI, 2017. "Public education expenditure and economic growth: the educational quality threshold effect," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 45, pages 99-112.
    9. Zhang, Xiaobei & Wang, Xiaojun, 2021. "Measures of human capital and the mechanics of economic growth," China Economic Review, Elsevier, vol. 68(C).
    10. Vinayagathasan, Thanabalasingam, 2013. "Inflation and economic growth: A dynamic panel threshold analysis for Asian economies," Journal of Asian Economics, Elsevier, vol. 26(C), pages 31-41.
    11. Ibarra, Raul & Trupkin, Danilo R., 2016. "Reexamining the relationship between inflation and growth: Do institutions matter in developing countries?," Economic Modelling, Elsevier, vol. 52(PB), pages 332-351.
    12. Celil AYDIN, 2017. "The Inflation-Growth Nexus: A Dynamic Panel Threshold Analysis For D-8 Countries," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 134-151, December.
    13. Chen, Jinzhao & Quang, Thérèse, 2014. "The impact of international financial integration on economic growth: New evidence on threshold effects," Economic Modelling, Elsevier, vol. 42(C), pages 475-489.
    14. repec:hum:wpaper:sfb649dp2009-036 is not listed on IDEAS
    15. Ndoricimpa Arcade, 2017. "Working Paper 249 - Threshold Effects of Inflation on Economic Growth in Africa: Evidence from a Dynamic Panel Threshold Regression," Working Paper Series 2359, African Development Bank.
    16. Stephanie Kremer & Alexander Bick & Dieter Nautz, 2013. "Inflation and growth: new evidence from a dynamic panel threshold analysis," Empirical Economics, Springer, vol. 44(2), pages 861-878, April.
    17. Abdenour, Redouan & Tounsi, Said, 2015. "Non-Linear Effects of Fiscal Policy on Economic Growth: Moroccan Case," MPRA Paper 69830, University Library of Munich, Germany, revised 2016.
    18. Linda Glawe & Helmut Wagner, 2024. "Inflation and inequality: new evidence from a dynamic panel threshold analysis," International Economics and Economic Policy, Springer, vol. 21(2), pages 297-309, May.
    19. Ibrahim Ngouhouo & Guivis Zeufack Nkemgha, 2018. "Inflation and Economic Growth: A Comparative Empirical Analysis Between Cameroon and the Ivory Coast," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(12), pages 1-87, December.
    20. Tolga Omay & Reneé Eyden & Rangan Gupta, 2018. "Inflation–growth nexus: evidence from a pooled CCE multiple-regime panel smooth transition model," Empirical Economics, Springer, vol. 54(3), pages 913-944, May.
    21. Chen, Jinzhao & Quang, Thérèse, 2014. "The impact of international financial integration on economic growth: New evidence on threshold effects," Economic Modelling, Elsevier, vol. 42(C), pages 475-489.

    More about this item

    Keywords

    Inflation; Croissance; Politique monétaire; Effets de seuil; Panel dynamique; UEMOA.;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:23542. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.