Inflation persistence in the Franc zone: Evidence from disaggregated prices

Abstract

In sub-Saharan Africa, where inflation persistence is likely to have deleterious welfare consequences, little attempt has been made to study this phenomenon. Using data over 1989:11-2002:09, this paper investigates persistence in disaggregated (food and non-food) inflation for thirteen Communauté Financière Africaine (CFA) member states using fractional integration (FI) methods. The results show that both inflation series are characterized by mean-reversion and finite variance, however it also exposes some asymmetry in inflation persistence across member states in both sectors. In Chad and Niger, the phenomenon is found to exist in both sectors. With uniform monetary policy across member states, implications for Monetary Policy, Nominal Convergence and Optimal Currency Area are then discussed.

Where Does the Axe Fall? Inflation Dynamics and Poverty Rates: Regional and Sectoral Evidence for Ghana

“…Coleman (2010) investigates the incidence of inflation persistence in the African CFA Franc zone for a two broad sectors i.e., food and nonfood.…”

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

“…As highlighted by Coleman (2010), inflation persistence could be present in Chad. In fact, the effect of rainfall, public spending, nominal effective exchange rate, and foreign prices on inflation could last after the first, second or third quarter, reflecting second round effects.…”

“…For the GCC countries, Kandil and Morsy (2009) concluded that inflation in trading partners as well as credit and aggregate spending explain inflation. Coleman (2010) analysed inflation persistence in 13 Communaute´Financie`re Africaine (CFA) member states and highlighted that inflation is persistent in Chad, Cote d'Ivoire and Niger. 1 The empirical strategy in this article combines three estimation methods: the Vector Error Correction Model (VECM), the single-equation model, and the Structural Vector Autoregression (SVAR) model.…”

A Study of Monetary Integration in West Africa and Its Implications on Trade in Africa<strong> </strong>

“…inflation, growth, per capita and currency union. (Coleman, 2010;Harvey & Cushing, 2015)The common stock of macroeconomic policies more in under developing countries, which makes a common strategic policy for individual states.…”