Persistence of Inflationary Shocks: Implications for West African Monetary Union Membership
AbstractPlans are far advanced to form a second monetary union, the West African Monetary Zone (WAMZ), in Africa. While much attention is being placed on convergence criteria and preparedness of the five aspiring member states, less attention is being placed on how the dynamics of inflation in individual countries are (dis)similar. This paper aims to stimulate debate on the long term sustainability of the union by examining the dynamics of inflation within these countries. Using Fractional Integration (FI) methods, we establish that some significant differences exist among the countries. Shocks to inflation in Sierra Leone are non mean reverting; results for The Gambia, Ghana and Guinea-Bissau suggest some inflation persistence, despite being mean reverting. Some policy implications are discussed and possible outstanding policy questions are also raised.
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Bibliographic InfoPaper provided by Nottingham Trent University, Nottingham Business School, Economics Division in its series Working Papers with number 2010/8.
Date of creation: Nov 2010
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Web page: http://www.ntu.ac.uk/nbs
Inflationary shocks; fractional integration; stationarity; West Africa; Monetary unions.;
Other versions of this item:
- Paul Alagidede & Simeon Coleman & Juan Carlos Cuestas, 2010. "Persistence of Inflationary shocks: Implications for West African Monetary Union Membership," Working Papers 2010020, The University of Sheffield, Department of Economics, revised Nov 2010.
- Alagidede, Paul & Coleman, Simeon & Cuestas, Juan Carlos, 2010. "Persistence of Inflationary shocks: Implications for West African Monetary Union Membership," Stirling Economics Discussion Papers 2010-11, University of Stirling, Division of Economics.
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
This paper has been announced in the following NEP Reports:
- NEP-AFR-2010-11-27 (Africa)
- NEP-ALL-2010-11-27 (All new papers)
- NEP-CBA-2010-11-27 (Central Banking)
- NEP-MON-2010-11-27 (Monetary Economics)
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