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Oil windfall, public spending and price stability: modelling inflation in Chad†

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  • Tidiane Kinda

Abstract

This article examines the determinants of inflation in Chad using quarterly data from 1983:Q1 to 2009:Q3. The analysis is based on a single-equation model, completed by a Structural Vector Autoregression (SVAR) model to capture inflation persistence. The results show that the main determinants of inflation in Chad are rainfall, foreign prices, exchange rate movements and particularly public spending, which soared following the onset of oil production in 2003. The effects of rainfall shocks and changes in foreign prices on inflation persist during six quarters. Changes in public spending and the nominal exchange rate affect inflation during three and four quarters, respectively. †The views expressed herein are those of the author and should not be attributed to the IMF, its Executive Board, or its management.

Suggested Citation

  • Tidiane Kinda, 2013. "Oil windfall, public spending and price stability: modelling inflation in Chad†," Applied Economics, Taylor & Francis Journals, vol. 45(21), pages 3122-3135, July.
  • Handle: RePEc:taf:applec:v:45:y:2013:i:21:p:3122-3135
    DOI: 10.1080/00036846.2012.690851
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    1. Mame Astou Diouf, 2007. "Modeling Inflation for Mali," IMF Working Papers 07/295, International Monetary Fund.
    2. Magda Kandil & Hanan Morsy, 2011. "Determinants Of Inflation In Gcc," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 141-158.
    3. Alexander Y Kyei & Nir Klein, 2009. "Understanding Inflation Inertia in Angola," IMF Working Papers 09/98, International Monetary Fund.
    4. Kenji Moriyama, 2008. "Investigating Inflation Dynamics in Sudan," IMF Working Papers 08/189, International Monetary Fund.
    5. Angel J. Ubide, 1997. "Determinants of Inflation in Mozambique," IMF Working Papers 97/145, International Monetary Fund.
    6. Rodolphe Blavy, 2004. "Inflation and Monetary Pass-Through in Guinea," IMF Working Papers 04/223, International Monetary Fund.
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