Template-Type: ReDIF-Paper 1.0
Author-Name: Paul Alagidede
Author-Name: Simeon Coleman
Author-Name: Juan Carlos Cuestas
Title: Persistence of Inflationary Shocks: Implications for West African Monetary Union Membership
Abstract: Plans are far advanced to form a second monetary union, the West African Monetary Zone
(WAMZ), in Africa. While much attention is being placed on convergence criteria and
preparedness of the five aspiring member states, less attention is being placed on how the
dynamics of inflation in individual countries are (dis)similar. This paper aims to stimulate
debate on the long term sustainability of the union by examining the dynamics of inflation
within these countries. Using Fractional Integration (FI) methods, we establish that some
significant differences exist among the countries. Shocks to inflation in Sierra Leone are non
mean reverting; results for The Gambia, Ghana and Guinea-Bissau suggest some inflation
persistence, despite being mean reverting. Some policy implications are discussed and
possible outstanding policy questions are also raised.
File-URL: http://www.ntu.ac.uk/__data/assets/pdf_file/0013/310252/Persistence-of-inflationary-shocks.pdf
File-Format: Application/pdf
File-Function: First version, 2010
Creation-Date: 2010-11
Classification-JEL: C14, E31, E58
Keywords: Inflationary shocks, fractional integration, stationarity, West Africa, Monetary
unions.
Handle: RePEc:nbs:wpaper:2010/8