Monetary Growth and Exchange Rate Depreciation as Causes of Inflation in African Countries: An Empirical Analysis

49 Pages Posted: 15 Feb 2006

See all articles by Elie Canetti

Elie Canetti

affiliation not provided to SSRN

Date Written: July 1991

Abstract

This 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.

JEL Classification: C22, E31, E63, O55

Suggested Citation

Canetti, Elie, Monetary Growth and Exchange Rate Depreciation as Causes of Inflation in African Countries: An Empirical Analysis (July 1991). IMF Working Paper No. 91/67, Available at SSRN: https://ssrn.com/abstract=884924

Elie Canetti (Contact Author)

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