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Inflation Dynamics in the CEMAC Region

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  • Marcos Poplawski-Ribeiro
  • Darlena Tartari
  • Carlos Caceres

Abstract

This paper analyses inflation dynamics in the Central African Economic and Monetary Community (CEMAC) using a constructed dataset for country-specific commodity price indices and panel cointegrated vector autoregressive (VAR) models. Imported commodity price shocks are significant in explaining inflation in the region. Governments are another driving force of inflation dynamics mainly through controlled prices and the role of capital expenditure in domestic activity. In most CEMAC countries, the largest effect of global food and fuel prices occurs after four or five quarters in noncore inflation and then decays substantially over time. Second-round effects are significant only in Cameroon and to a lesser extent in the Republic of Congo.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/232.

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Length: 29
Date of creation: 01 Oct 2011
Date of revision:
Handle: RePEc:imf:imfwpa:11/232

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Keywords: Inflation; Commodity prices; Central Africa; Central African Economic and Monetary Community; Economic models; Energy prices; External shocks; Food imports; Government expenditures; Price controls; monetary fund; monetary policy; inflation dynamics; inflationary pressures; central bank; price inflation; money supply; aggregate demand; monetary community; monetary union; price stability; monetary determinants; relative price variability; real output; inflationary impact; monetary transmission; relative price; macroeconomic stability; demand for money; effect of inflation; monetary transmission mechanism; lower inflation; independent monetary policy; monetary policy rules; foreign exchange; high inflation;

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  1. Pedroni, Peter, 1999. " Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-70, Special I.
  2. Peter Pedroni, 2001. "Purchasing Power Parity Tests in Cointegrated Panels," Department of Economics Working Papers 2001-01, Department of Economics, Williams College.
  3. International Monetary Fund, 2011. "The Cyclicality of Fiscal Policies in the CEMAC Region," IMF Working Papers 11/205, International Monetary Fund.
  4. Peter Pedroni, 2000. "Fully Modified OLS for Heterogeneous Cointegrated Panels," Department of Economics Working Papers 2000-03, Department of Economics, Williams College.
  5. David Coady & Taimur Baig & Joseph Ntamatungiro & Amine Mati, 2007. "Domestic Petroleum Product Prices and Subsidies," IMF Working Papers 07/71, International Monetary Fund.
  6. Kerstin Gerling & Carlos Fernandez Valdovinos, 2011. "Inflation Uncertainty and Relative Price Variability in WAEMU Countries," IMF Working Papers 11/59, International Monetary Fund.
  7. Mohamed El Harrak & Antonio David & Lorraine Ocampos & Marshall Mills, 2011. "Oil Spill(over)s," IMF Working Papers 11/102, International Monetary Fund.
  8. Mario Mansour & Michael Keen, 2009. "Revenue Mobilization in Sub-Saharan Africa," IMF Working Papers 09/157, International Monetary Fund.
  9. Pedroni, Peter, 2004. "Panel Cointegration: Asymptotic And Finite Sample Properties Of Pooled Time Series Tests With An Application To The Ppp Hypothesis," Econometric Theory, Cambridge University Press, vol. 20(03), pages 597-625, June.
  10. Coleman, Simeon, 2010. "Inflation persistence in the Franc zone: Evidence from disaggregated prices," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 426-442, March.
  11. Johansen, Søren & Juselius, Katarina, 1992. "Testing structural hypotheses in a multivariate cointegration analysis of the PPP and the UIP for UK," Journal of Econometrics, Elsevier, vol. 53(1-3), pages 211-244.
  12. Miguel A. Segoviano Basurto & Carlos Caceres & Vincenzo Guzzo, 2010. "Sovereign Spreads," IMF Working Papers 10/120, International Monetary Fund.
  13. Tidiane Kinda, 2011. "Modeling Inflation in Chad," IMF Working Papers 11/57, International Monetary Fund.
  14. Alfredo Baldini & Marcos Poplawski-Ribeiro, 2011. "Fiscal and Monetary Determinants of Inflation in Low-Income Countries: Theory and Evidence from Sub-Saharan Africa-super- †," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 20(3), pages 419-462, June.
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Cited by:
  1. Lledó, Victor & Poplawski-Ribeiro, Marcos, 2013. "Fiscal Policy Implementation in Sub-Saharan Africa," World Development, Elsevier, vol. 46(C), pages 79-91.

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