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Inflation Threshold Levels and Economic Growth in the Franc Zone Countries

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  • Sanga,Dimitri
  • Gui-Diby,Steve Loris

Abstract

This paper examines the growth-inflation nexus in Franc zone currency unions. Itaims at estimating the inflation threshold above which additional inflationary pressures adversely affect economicexpansion. It uses cointegration methods that are applied to data from 14 African countries from the Franc zone over1970-2018. Based on country-level data, the results indicate that it is possible to increase the threshold levels used byregional central banks to 5.4-5.6 percent in the Central African Monetary Union and 4.3-4.5 percent in the WestAfrican Monetary Union. Homogeneous cointegration panel data analyses confirm the need to increase the threshold inCentral African Monetary Union countries but do not in the West African Monetary Union countries.

Suggested Citation

  • Sanga,Dimitri & Gui-Diby,Steve Loris, 2020. "Inflation Threshold Levels and Economic Growth in the Franc Zone Countries," Policy Research Working Paper Series 9405, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9405
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    References listed on IDEAS

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    Keywords

    Inflation; Economic Growth; Industrial Economics; Economic Theory & Research; International Trade and Trade Rules; Macroeconomic Management;
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