Monetary Growth and Exchange Rate Depreciation As Causes of Inflation in African Countries
Author: Mr.Elie Canetti
Publisher: International Monetary Fund
Published: 1991-07-01
Total Pages: 49
ISBN-13: 1451848838
DOWNLOAD EBOOKThis paper examines the relative importance of monetary growth and exchange rate depreciation as causes of inflation in a sample of 10 Sub-Saharan African countries. Causality tests and impulse response functions derived from vector autoregression (VAR) analysis suggest that both monetary expansion and exchange rate adjustments cause inflation in a number of these countries. However, the failure of the tests to attribute the bulk of the variance in inflation in most of the countries to either variable suggests either a problem with the statistical technique or that some other factor--perhaps structural bottlenecks or a measure of overall macroeconomic policy stance incorporating both monetary and exchange rate policy--may be even more important as a determinant of inflation in African countries.