3 Long-Run Determinants of Inflation in WAEMU
Author:
Ms. Anne Marie Gulde
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and
Mr. Charalambos G Tsangarides
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Language:
English
Print Publication Date:
02 Apr 2008
Keywords:
BOOK; CFA franc; WAEMU country; CEMAC country; WAMZ country; CEMAC member country; Real effective exchange rates; Imports; Tariffs; Real exchange rates; Terms of trade; Sub-Saharan Africa; West Africa; Africa; Asia and Pacific; East Asia; pass-through effect; primary sector; WAEMU area inflation; inflation equation; price change; Inflation; Monetary base; Nominal effective exchange rate; Consumer price indexes

Abstract

In this chapter, we propose an empirical model of the long-run determinants of the inflation rate in WAEMU member countries. Understanding the economic processes that drive inflation is important because prices are an element of the competitiveness of economies. Using an econometric test that allows us to select appropriate macroeconomic variables that induce inflationary pressures, we find that in the WAEMU countries money supply is not the sole determinant of inflation in the long run. Other factors such as supply-side constraints and pass-through effects also play a significant role.

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Cover The CFA Franc Zone
The CFA Franc Zone
Common Currency, Uncommon Challenges
ISBN:
9781589066755
Publication Date:
02 Apr 2008
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781589066755.071
Pages:
410