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Inflation persistence in the Franc Zone: evidence from disaggregated prices

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  • Simeon Coleman

Abstract

In sub-Saharan Africa, where inflation persistence is likely to have deleterious welfare consequences, little attempt has been made to study this phenomenon. Using data over 1989:11-2002:09, this paper investigates persistence in disaggre- gated (food and non-food) inflation for thirteen Communaute Financiere Africaine (CFA) member states using fractional integration (FI) methods. The results show that both inflation series are characterized by mean-reversion and finite variance, however it also exposes some asymmetry in inflation persistence across member states in both sectors. In Chad and Niger, the phenomenon is found to exist in both sectors. With uniform monetary policy across member states, implications for Monetary Policy, Nominal Convergence and Optimal Currency Area are then discussed.

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Paper provided by Nottingham Trent University, Nottingham Business School, Economics Division in its series Working Papers with number 2008/16.

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Date of creation: Nov 2008
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Handle: RePEc:nbs:wpaper:2008/16

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Keywords: Fractional integration; inflation persistence; Franc Zone;

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Citations

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Cited by:
  1. Juan Carlos Cuestas & Estefanía Mourelle, 2009. "Inflation persistence and asymmetries: evidence for African countries," Working Papers 2009/2, Nottingham Trent University, Nottingham Business School, Economics Division.
  2. Paul Alagidede & Simeon Coleman & Juan Carlos Cuestas, 2010. "Persistence of Inflationary Shocks: Implications for West African Monetary Union Membership," Working Papers 2010/8, Nottingham Trent University, Nottingham Business School, Economics Division.
  3. Coleman, Simeon, 2010. "Inflation persistence in the Franc zone: Evidence from disaggregated prices," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 426-442, March.
  4. Rob Ackrill and Simeon Coleman, 2012. "Inflation dynamics in central and eastern European countries," Working Papers 2012/01, Nottingham Trent University, Nottingham Business School, Economics Division.
  5. Marcos Poplawski-Ribeiro & Darlena Tartari & Carlos Caceres, 2011. "Inflation Dynamics in the CEMAC Region," IMF Working Papers 11/232, International Monetary Fund.
  6. Cécile Couharde & Issiaka Coulibaly & David Guerreiro & Valérie Mignon, 2012. "Revisiting the theory of optimum currency areas: Is the CFA franc zone sustainable?," EconomiX Working Papers 2012-34, University of Paris West - Nanterre la Défense, EconomiX.
  7. Alagidede, Paul & Coleman, Simeon & Cuestas, Juan Carlos, 2012. "Inflationary shocks and common economic trends: Implications for West African monetary union membership," Journal of Policy Modeling, Elsevier, vol. 34(3), pages 460-475.
  8. Tidiane Kinda, 2011. "Modeling Inflation in Chad," IMF Working Papers 11/57, International Monetary Fund.
  9. Couharde, Cécile & Coulibaly, Issiaka & Damette, Olivier, 2013. "Anchor currency and real exchange rate dynamics in the CFA Franc zone," Economic Modelling, Elsevier, vol. 33(C), pages 722-732.
  10. Coleman, Simeon, 2012. "Where Does the Axe Fall? Inflation Dynamics and Poverty Rates: Regional and Sectoral Evidence for Ghana," World Development, Elsevier, vol. 40(12), pages 2454-2467.

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