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Successful inflation targeting in Mozambique despite vulnerability to internal and external shocks


  • Andersson, Per-Åke

    () (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Sjö, Bo

    (Department of Economics, School of Business, Economics and Law, Göteborg University)


Inflation has proven to be an important obstacle to successful economic adjustment in many countries. Despite both internal and external shocks to the economy, Mozambique has succeeded in controlling the inflation to gain high economic growth. This paper provides an econometric analysis of the dynamics behind the experience of Mozambique. Inflation is driven by both a purchasing power parity relation with South Africa and monetary factors. The result indicates that the country is using a crawling peg exchange rate regime.

Suggested Citation

  • Andersson, Per-Åke & Sjö, Bo, 2012. "Successful inflation targeting in Mozambique despite vulnerability to internal and external shocks," Working Papers in Economics 544, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0544

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    References listed on IDEAS

    1. Shanaka J Peiris & Magnus Saxegaard, 2007. "An Estimated DSGE Model for Monetary Policy Analysis in Low-Income Countries," IMF Working Papers 07/282, International Monetary Fund.
    2. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
    3. Francis Vitek, 2009. "An Assessment of External Price Competitiveness for Mozambique," IMF Working Papers 09/165, International Monetary Fund.
    4. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    5. Mark R. Stone, 2003. "Inflation Targeting Lite," IMF Working Papers 03/12, International Monetary Fund.
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    More about this item


    inflation; purchasing power parity; money market; VAR model;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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