Sources of Inflation in Sub-Saharan Africa

26 Pages Posted: 24 Apr 2007

See all articles by Regis Barnichon

Regis Barnichon

London School of Economics & Political Science (LSE)

Shanaka J. Peiris

International Monetary Fund (IMF)

Date Written: February 2007


This paper explores the sources of inflation in Sub-Saharan Africa by examining the relationship between inflation, the output gap, and the real money gap. Using heterogeneous panel cointegration estimation techniques, we estimate cointegrating vectors for the production function and the real money demand function to recover the structural output and money gaps for seventeen African countries. The central finding is that both gaps contain significant information regarding the evolution of inflation, albeit with a larger role played by the money gap. There is no significant evidence of asymmetry in the relationship.

Keywords: Inflation, Sub-Saharan Africa, Demand for money, Production, Accounting, Economic models

JEL Classification: E3, E5, O4

Suggested Citation

Barnichon, Regis and Peiris, Shanaka J., Sources of Inflation in Sub-Saharan Africa (February 2007). IMF Working Papers, Vol. , pp. 1-24, 2007. Available at SSRN:

Regis Barnichon

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Shanaka J. Peiris (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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