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Inflation rate of 14–16% is fair for the sub-Saharan African dollarization

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  • Ibrahim D. Raheem

    () (University of Kent)

Abstract

Abstract This study contributes to the literature by extending the argument of the theoretical underpinning of dollarization. While the earlier studies have identified inflation, inter alia, as the important determinant of dollarization, it is silent about the exact inflation rate that is conducive for the dollarized economies. Using threshold autoregressive model, results show that inflation rate of 14–16% is favorable for the economies. Any further increment, beyond this level, would magnify the incidence of dollarization and vice-versa. Results are consistent to some robustness checks. Policy implications were suggested based upon the results estimated.

Suggested Citation

  • Ibrahim D. Raheem, 2018. "Inflation rate of 14–16% is fair for the sub-Saharan African dollarization," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 42(4), pages 779-794, October.
  • Handle: RePEc:spr:jecfin:v:42:y:2018:i:4:d:10.1007_s12197-017-9421-y
    DOI: 10.1007/s12197-017-9421-y
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    References listed on IDEAS

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    More about this item

    Keywords

    Dollarization; Inflation; Threshold autoregressive; And sub-Saharan Africa;

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions

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