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Determinants of Inflation and its Instability in Sudan 1970 - 1994

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  • Abdel Mahmoud M. Abdel Rahman

Abstract

During the past three decades inflation in Sudan accelerated and was highly variable. Various factors contributed to this acceleration and variability. Predominant among these is the monetary financing of a persistent budget deficit in the country. Other real, expectational and structural factors also contributed to the incidence of this high inflation episode witnessed in the country. This paper investigates the sources of instability in both the mean and variance of inflation. Account of the shifting means is undertaken by shift dummies whereas account of the variable variance is undertaken via Autoregressive Conditional Heteroscedasticity (ARCH) and Error Correction (EC) estimation mechanisms. The analysis exploits recent results on cointegration given the obvious nonstationarity of the data within the high inflation context. We also trace the nominal, real, structural and expectational determinants of the Sudan inflation.

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  • Abdel Mahmoud M. Abdel Rahman, 1997. "Determinants of Inflation and its Instability in Sudan 1970 - 1994," Working Papers 9720, Economic Research Forum, revised 12 Nov 1997.
    • Handle: RePEc:erg:wpaper:9720
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    Cited by:

    1. Thouraya Boujelbene & Younes Boujelbene, 2010. "Long run determinants and short run dynamics of inflation in Tunisia," Applied Economics Letters, Taylor & Francis Journals, vol. 17(13), pages 1255-1263.

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