Author: A.O. Folawewo
Volume: 53 Issue No:2 Year:2011
Abstract: This study investigated the sources of inflation persistence in SSA countries, using a simple model of accommodating monetary policy framework. The model was estimated using a dynamic panel estimation technique with annual data covering 1985 to 2010. The results showed that the current level of inflation is significantly affected by its past level,
suggesting evidence of inflation persistence. Real interest rate, nominal exchange rate and imported inflation (measured by US inflation) were also found to be important factors influencing inflation. But real GDP, deficit to GDP ratio and money supply had little effect on inflation. Based on the findings, the need for monetary authorities to design policies that accommodate inflation was suggested.
suggesting evidence of inflation persistence. Real interest rate, nominal exchange rate and imported inflation (measured by US inflation) were also found to be important factors influencing inflation. But real GDP, deficit to GDP ratio and money supply had little effect on inflation. Based on the findings, the need for monetary authorities to design policies that accommodate inflation was suggested.