On the drivers of inflation in Sub-Saharan Africa

Nguyen, Anh D. M.; Dridi, Jemma; Unsal, Filiz; Williams, Oral

doi:10.1016/j.inteco.2017.04.002

Cited by 36 publications

(28 citation statements)

References 36 publications

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“…This has conferred the price-setting behavior as rationally looking. These results concur with those from Nguyen, Dridi, Unsal, and Williams (2017). They investigated the inflation dynamics in Sub-Sahara Africa with Kenya included using both supply side and demand side proxies.…”

Section: Results and Analysissupporting

confidence: 85%

Trade-Off Phillips Curve, Inflation and Economic Implication: The Kenyan Case

Duncan¹,

Li²,

Ssali³

2019

IJEF

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This paper investigated the trade-off and inflation drivers based on the Phillips curve framework to determine the relationship and their impact between inflation, unemployment and output for Kenyan case from 2006:M1 to 2016:M12 by contrasting the 2SLS on 2 different measures of marginal cost with 3 differently instrumented shocks. Results confirmed; (1) significant trade-off that reduced inflation by 2.09% and 0.08% when unemployment and output respectively increase by 1%, while, 1% increase in output demeaned unemployment by 0.02%, (2) the forward-looking inflation and unemployment significantly drive observed inflation, and (3) unlike monetary supply, oil shocks best accounts for the observed dynamics. Although laudable policies been implemented by fiscal and macro-economic planners, they have not achieved the odds to sufficiently contain the import shocks, making both unemployment and the rational expectations to significantly drive the observed inflation. However, revisiting of the incumbent fiscal policies and their tight implementation would facilitate long term price stabilities to reduce the inflationary dynamics. To the significant import shocks, the state should foster feasible macro-economic diversifications, investments policies, modern technologies in real economic activity production, and renewable energy sourcing that would facilitate robust economic growth that would curb large revenue outflows due to commodity imports and cushioning the devaluation of the Kenyan shilling.

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Section: Results and Analysissupporting

confidence: 85%

Trade-Off Phillips Curve, Inflation and Economic Implication: The Kenyan Case

Duncan¹,

Li²,

Ssali³

2019

IJEF

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“…Foreign factors refer to the total of regional and global factors, in which the former is the impact of shocks in other SSA economies, and the latter is the impact of shocks in the non-SSA economies of the model including the global oil and food shocks. It happens in all EAC countries that foreign factors appear to contribute more to inflation fluctuations than domestic ones, as in line with Nguyen et al (2017). This can be explained by increases in trade and financial openness in the area, making the economy more exposed to foreign factors as discussed in Section 2.…”

Section: Global Vector Autoregressionmentioning

confidence: 59%

Assessing Inflation Convergence in the East African Community

Dridi

Nguyen

2018

J of Intl Development

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The paper investigates inflation convergence in five East African countries: Burundi, Kenya, Rwanda, Tanzania and Uganda, as they aspire to form a monetary union by 2024 under the umbrella of the East African Community (EAC). We find that inflation differentials in the five EAC countries are not persistent, implying that inflation rates in these countries have been converging. This convergence can be attributed to a similarity in terms of the nature of shocks affecting EAC countries as well as the crucial role of foreign factors as drivers of inflation in these countries since the early 1990s. © 2018 John Wiley & Sons, Ltd.

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“…Macroeconomic stability matters for sustained economic growth, especially in the long run. Maintaining low and stable inflation rates requires i) controlling the supply of money, which influences price indices in the short term, and ii) shielding the economy from inflation spill-overs and changes in oil and food prices, which impact inflation in the longer term (Nguyen et al, 2015;Simpasa and Gurara, 2011).…”

Section: Policy Recommendationsmentioning

confidence: 99%

Dynamics of growth, jobs and inequalities in East Africa

2018

Africa’s Development Dynamics

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This new annual report, Africa's Development Dynamics, analyses the continent's development policies. It presents a fresh narrative on Africa's development, assessing the economic, social and institutional performance in light of targets of the African Union's Agenda 2063. This first edition examines the relations between growth, employment and inequalities in Africa and draws strategic policy implications.Africa's Development Dynamics 2018 is the product of a collaborative approach. It results from a unique, broad partnership between the African Union's Commission for Economic Affairs and the OECD Development Centre. A team of academic researchers, economists, statisticians, and other experts from Africa and diverse world regions contributed to this edition.

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On the drivers of inflation in Sub-Saharan Africa

Cited by 36 publications

References 36 publications

Trade-Off Phillips Curve, Inflation and Economic Implication: The Kenyan Case

Trade-Off Phillips Curve, Inflation and Economic Implication: The Kenyan Case

Assessing Inflation Convergence in the East African Community

Dynamics of growth, jobs and inequalities in East Africa

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