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Effets Non Linéaires de l'Inflation sur la Croissance dans l'UEMOA
[Nonlinear Effects of Inflation on Growth in the WAEMU]

Author

Listed:
  • Combey, Adama
  • Nubukpo, Kako

Abstract

The monetary policy conducted by the Central Bank of West African States (BCEAO) faces many challenges, including the need to fight against inflation, which is driven mainly by the volatility of commodity prices on international markets. It is also fall to common criticisms about the lack of economic growth objective in her mandate as developing countries central bank in among the poorest in the world. It therefore not immune to reflection on the existence of a dilemma "inflation-growth" it would, consciously or unconsciously involved. The aim of this paper is to demonstrate the existence of a non-linear relationship between inflation and the economic growth within the West African Economic and Monetary Union (WAEMU) and to determine the inflation threshold at which a trade-off between inflation and growth is effective. From a threshold effects dynamic panel model, the study shows that the optimal level of inflation in the WAEMU zone is 8.08%. This result raises the question of the relevance of the standard deduction of 3% under the convergence criteria of the WAEMU zone. In addition, the inclusion of such a result is likely to help the BCEAO in the definition and conduct of monetary policy.

Suggested Citation

  • Combey, Adama & Nubukpo, Kako, 2010. "Effets Non Linéaires de l'Inflation sur la Croissance dans l'UEMOA
    [Nonlinear Effects of Inflation on Growth in the WAEMU]
    ," MPRA Paper 23542, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:23542
    as

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    File URL: https://mpra.ub.uni-muenchen.de/23542/2/MPRA_paper_23542.pdf
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    References listed on IDEAS

    as
    1. Hansen, Bruce E., 1999. "Threshold effects in non-dynamic panels: Estimation, testing, and inference," Journal of Econometrics, Elsevier, vol. 93(2), pages 345-368, December.
    2. Hansen, Bruce E, 1996. "Inference When a Nuisance Parameter Is Not Identified under the Null Hypothesis," Econometrica, Econometric Society, vol. 64(2), pages 413-430, March.
    3. João R. Faria & Francisco Galrão Carneiro, 2001. "Does High Inflation Affect Growth in the Long and Short Run?," Journal of Applied Economics, Universidad del CEMA, vol. 4, pages 89-105, May.
    4. David, Drukker & Pedro, Gomis-Porqueras & Paula, Hernandez -erme, 2005. "Threshold effects in the relationship between inflation and growth: a new panel-data approach," MPRA Paper 38225, University Library of Munich, Germany.
    5. Sylviane GUILLAUMONT JEANNENEY, 2004. "Bilan de l'intégration monétaire dans l'UMOA," Working Papers 200418, CERDI.
    6. Guillermo A. Calvo & Fabrizio Coricelli, 1993. "Output Collapse in Eastern Europe: The Role of Credit," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 32-52, March.
    7. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 1127-1170.
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    Citations

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    Cited by:

    1. LONZO LUBU, Gastonfils & AVOM, Desiré, 2014. "Les Effets Non Lineaires Des Dépenses Publiques Sur La Croissance Économique En Rd Congo
      [Nonlinear Effects Of Spending On Economic Growth In Dr Congo]
      ," MPRA Paper 60716, University Library of Munich, Germany.
    2. Issiaka Coulibaly, 2014. "Competitiveness and growth within the CFA franc zone: Does the switch to the Euro matter?," International Economics, CEPII research center, issue 139, pages 1-18.
    3. DJAHINI, Edém, 2015. "Les principaux déterminants de la compétitivité internationale en Afrique Sub-saharienne
      [The main determinants of international competitiveness in Sub-Saharan Africa]
      ," MPRA Paper 65024, University Library of Munich, Germany, revised 16 Jun 2015.
    4. repec:cii:cepiei:2014-q3-139-1 is not listed on IDEAS

    More about this item

    Keywords

    Inflation; Croissance; Politique monétaire; Effets de seuil; Panel dynamique; UEMOA.;

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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