Download or read book An Estimation of Inflation Threshold for Africa written by Ikechukwu Kelikume and published by . This book was released on 2019 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: The objective of this study was to shed new light on the non-linear effects of inflation and the inflation thresholds for long-term growth in Africa. Using a dynamic panel threshold model, the study covered a large panel-data set of 41 African countries for the period 1960-2015. The sample was divided into 21 resource rich countries and 20 non-resource rich countries in order to see if there are any differences in the empirical linkage between inflation and long-term growth. For the full sample of African countries, the empirical evidence showed that inflation hampered growth if it exceeds 11.1 percent. Below this threshold, however, the impact of inflation on growth remained positive though insignificant. However, the results differed for resource rich and non-resource rich African countries: inflation was beneficial for growth when inflation is below 12.5 percent and 9.4 percent threshold levels for resource rich and non-resource rich African countries, respectively. However, when inflation exceeded these threshold levels, it had a negative effect on growth. The estimated inflation threshold value for resource rich countries was definitely more than in non-resource rich countries. The evidence clearly suggested a growth-dampening effect of excessive inflation for Africa.
Download or read book Threshold effects of inflation on economic growth in selected African regional economic communities Evidence from a dynamic panel threshold modeling written by Arcade Ndoricimpa and published by Litres. This book was released on 2022-01-29 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: The objective of this study is to estimate inflation threshold and examine its impact on the inflation-growth nexus in selected African regional economic communities. While a number of empirical studies exist in this area for developing countries, they bundle up countries from Asia, Africa and Latin America which do not have the same inflation experiences. This study therefore focuses on Africa. However, since African regional groupings themselves have different inflation experiences, non-linearity in the relationship between inflation and growth is explored within each grouping separately. The study uses dynamic panel threshold modeling recently suggested by Kremer et al. (2013) which extends the non-dynamic panel threshold model of Hansen (1999) and the cross-sectional threshold model of Caner and Hansen (2004). The results indicate that the estimated inflation threshold is different across the regional economic communities. Nonlinearity in inflation-growth nexus seems to hold in CEMAC, COMESA and SADC while it is questioned in WAEMU and WAMZ. For CEMAC, COMESA and SADC, the findings indicate that inflation above the threshold is harmful to growth. Some correlations are established in this study but further analysis is needed to suggest a policy.
Download or read book Inflation and Growth in the WAMZ Evidence from a Threshold Analysis written by Abu Bakarr Tarawalie and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The focus of this paper was to empirically estimate the threshold levels of inflation in the WAMZ, using the conditional least square technique. The study also identified the determinants of growth in the WAMZ. The empirical analysis uses annual data from 1970-2010 for Ghana, Nigeria and Sierra Leone, and 1980-2010 for the Gambia and Guinea. The results showed that there exists a statistically significant long-run negative relationship between inflation and economic growth for the WAMZ countries. Furthermore, the empirical results strongly suggest the existence of threshold level of inflation for the WAMZ countries, beyond which inflation exert a negative effect on growth. The results revealed an inflation rate of 9 percent as the optimal rate of inflation for the WAMZ countries. The results showed that WAMZ countries threshold inflation rates lie within the convergence criterion of maintaining an inflation rate not exceeding 10 percent. The results are useful for policy makers in providing some clue in setting an optimal inflation target. Policy makers should implement policies aimed at achieving the threshold inflation rate that is consistent with higher economic growth. Thus, it is desirable to keep inflation rate at least within the threshold level in member countries, as it may help maintain sustainable growth. A sustainable increase in growth can be achieved by directing monetary policy towards maintaining price stability.
Download or read book Inflation Dynamics in South Africa written by Eliphas Ndou and published by Springer. This book was released on 2017-02-21 with total page 546 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book offers a comprehensive empirical analysis of South African inflation dynamics, using a variety of techniques including counterfactual analysis. The authors elaborate the roles in inflation of thresholds, nonlinearities and asymmetries introduced by economic conditions such as the size of exchange rate changes and volatility, GDP growth, inflation, output gap, credit growth, sovereign spreads and fiscal policy, providing new policy evidence on the impact of these. Ndou and Gumata apply techniques to determine the prevalence of updating inflation expectations, and reconsider the propagation effects of a number of inflation risk factors. Asking to what extent the evidence points to a need to enforce price stability and the anchoring of inflation expectation, the book fills existing gaps in South African Policy, and maintains a clear argument that price stability is consistent with the 3 to 6 per cent inflation target range, and that threshold application should form an important aspect of policy analysis in periods of macroeconomic uncertainty. As such, the book serves as an excellent reference text for academic and policy discussions alike.
Download or read book Threshold Effect of Inflation on Economic Growth in the West African Monetary Zone written by Olorunsola E. Olowofeso and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: While previous studies have explored the relationship between inflation and economic growth, the existing literature on threshold effect of inflation on economic growth in the West African Monetary Zone (WAMZ) predominantly assumes a linear association, neglecting the possibility of nonlinearity. This study aims to fill the gap in the empirical literature by exploiting the variation in inflation rates across countries and over time to identify endogenously the threshold inflation level that affects economic growth in WAMZ countries over the period 2001-2019. The paper applies a Panel Smooth Transition Regression (PSTR) model, considering the heterogeneity in inflation rates across countries and over time and nonlinearities in the inflation-growth nexus. Results reveal an inflation threshold of 10.3 per cent per annum for WAMZ countries, showing that achieving moderate inflation below this threshold will stimulate economic growth while high inflation above the threshold is detrimental to growth. The result provides strong empirical support for the policy stance of WAMZ countries regarding the convergence criterion to contain inflation to a single-digit level. This finding highlights the importance of adopting moderate inflation target below the identified threshold of 10.3 percent to foster sustainable economic growth. It underscores the need for central banks to adopt more proactive approach to monetary policy by closely monitoring inflation levels and taking appropriate actions to keep inflation within this desired range. Indeed, the evidence of such a nonlinear relationship implies that central banks should pay close attention to managing inflation expectations, through measures including clear and effective communication of monetary policy actions, which would help anchor inflation expectations to ensure a favourable inflation environment that supports economic growth and improve credibility of monetary policy in the region.
Download or read book Inflation Growth Nexus and Regional Integration in West Africa written by Makiliwè Barcola and published by . This book was released on 2019 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we test the existence of an optimal inflation interval within which, the inflation of the west African countries supports economic growth. Besides this objective, we seek to test the validity of the 5% inflation threshold not to be exceeded, proposed as a convergence criterion for the fifteen countries of the region called to form a monetary union by 2020. Our analysis covers the period 2007-2016. By adopting a nonlinear approach, our investigation reveals two (02) endogenous inflation thresholds estimated at 8.01% and 15.46%. The positive effect on growth begins when inflation is comprised between the two thresholds. Above this interval, inflation has no effect on economic growth. Our results invalidate hence the 5% inflation threshold proposed as a convergence criterion and for supporting economic growth within the future monetary union. For a high-performing monetary union, preferably it would be better to define an inflation threshold between 8.01 and 15.46% as convergence criterion.
Download or read book Inflation Threshold Levels and Economic Growth in the Franc Zone Countries written by Dimitri Sanga and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Threshold Effects in the Relationship Between Inflation and Growth written by Mohsin S. Khan and published by International Monetary Fund. This book was released on 2000-06 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reexamines the issue of the existence of threshold effects in the relationship between inflation and growth, using new econometric techniques that provide appropriate procedures for estimation and inference. The threshold level of inflation above which inflation significantly slows growth is estimated at 1–3 percent for industrial countries and 7–11 percent for developing countries. The negative and significant relationship between inflation and growth, for inflation rates above the threshold level, is quite robust with respect to the estimation method, perturbations in the location of the threshold level, the exclusion of high-inflation observations, data frequency, and alternative specifications.
Download or read book Inflation Threshold and Nonlinearity written by Derwina Morar and published by . This book was released on 2011 with total page 246 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Inflation Thresholds and Relative Price Variability in the ECOWAS Region written by Eunice N. Egbuna and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: While the relationship between inflation and relative price variability (RPV) has been widely investigated in developed and emerging market economies because of its direct relevance to monetary policy implementation, research has neglected this linkage in most developing countries especially in the ECOWAS region. This paper examines whether RPV responds differently to different inflation regimes across the ECOWAS region, determining the inflation threshold that would minimize the distortionary impact of expected inflation on RPV in the region. Using the Panel Smooth Transition Regression (PSTR) model over the period 2008:M1 to 2019:M12, the paper finds that ECOWAS countries would achieve lower RPV in the moderate/intermediate inflation regime where the undesirable effect of expected inflation on RPV fades out. This regime ranges from an inflation rate of 7.1 percent to 8.3 percent per annum. The paper further establishes different inflation thresholds for the WAEMU and WAMZ countries, which reflects the differences in inflation tolerance levels between the Zones. It shows that inflation targets below the thresholds of 5.5 percent and 8.3 percent per annum, are desirable in the WAEMU and WAMZ, respectively. Along these lines, this paper concludes that ECOWAS countries should adopt a two-tier inflation compliance regime, until a common monetary policy framework is adopted across the region. The determination of appropriate inflation targets in line with these thresholds in both Zones would pave the way for the adoption of an inflation targeting (IT) regime to anchor inflation expectations and enhance credibility to monetary policy across the wider ECOWAS region.
Download or read book Inflation and Growth written by Stephanie Kremer and published by . This book was released on 2010 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Inflation and Economic Growth in Southern African Countries written by Priscilla Iriagbonse-Alikor and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the nonlinear impact of inflation on growth using a balanced panel data set of Southern African Countries from 1980-2021. The estimated results are robust across different competing econometrics techniques. The study observed that economic growth is impacted differently at low and high inflation levels. At a low level of inflation, the study found a positive and significant impact of inflation on economic growth. Economic growth is inflation-inducing below the inflation threshold. However, at a high level of inflation, economic growth is negatively and significantly impacted. For countries with an average inflation rate below the identified threshold (24.7%), the inflation rate has a strong positive impact on economic growth. This suggests that the marginal impact of inflation on economic growth starts becoming negative at 24.7%. Moreover, against theoretical expectations, a high inflation rate does not appear to reduce economic growth by crowding out investment in physical capital. The negative impact of inflation on economic growth operates through a lower quality of population growth rather than population growth per se. Overall, the empirical findings of this study provide policy direction to the government and monetary authorities.
Download or read book Financial Development Inflation and Growth in Selected West African Countries written by Ibrahim Raheem and published by . This book was released on 2015 with total page 9 pages. Available in PDF, EPUB and Kindle. Book excerpt: The study examined a nonlinear relationship between inflation and growth through financial development using data for Nigeria, Ghana and Cote d'Ivoire for periods between 1970 and 2010. The threshold value of inflation that could ensure positive association in the finance-growth nexus was empirically determined. Our results confirmed the existence of threshold with estimates that suggest that the threshold level of inflation is between 5% and 10% per annum for Ghana, and 15% per annum for Nigeria and Cote d' Ivoire.
Download or read book Threshold Effects in the Relationship Between Inflation and Economic Growth written by Rutayisire Musoni and published by . This book was released on 2015 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Achieving Price Financial and Macro Economic Stability in South Africa written by Nombulelo Gumata and published by Springer Nature. This book was released on 2021-05-27 with total page 556 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book explores the macro-financial effects of central bank balance sheets, macro-prudential tools, and financial regulation in South Africa. How employment can be maximised while keeping inflation low and stable is examined in relation to the structural changes required to alter the composition of South African bank balance sheets. Quantitative methods and approaches are utilised to highlight the impact of suggested policies. This book aims to outline strategies and policy interventions that can help achieve the National Development Plan in South Africa. It will be of interest to researchers and policymakers working within development economics, African economics, development finance, and financial policy.
Download or read book Inflation Targeting and Exchange Rate Management In Less Developed Countries written by Mr.Marco Airaudo and published by International Monetary Fund. This book was released on 2016-03-08 with total page 65 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze coordination of monetary and exchange rate policy in a two-sector model of a small open economy featuring imperfect substitution between domestic and foreign financial assets. Our central finding is that management of the exchange rate greatly enhances the efficacy of inflation targeting. In a flexible exchange rate system, inflation targeting incurs a high risk of indeterminacy where macroeconomic fluctuations can be driven by self-fulfilling expectations. Moreover, small inflation shocks may escalate into much larger increases in inflation ex post. Both problems disappear when the central bank leans heavily against the wind in a managed float.
Download or read book Is There a Debt threshold Effect on Output Growth written by Mr.Alexander Chudik and published by International Monetary Fund. This book was released on 2015-09-08 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies the long-run impact of public debt expansion on economic growth and investigates whether the debt-growth relation varies with the level of indebtedness. Our contribution is both theoretical and empirical. On the theoretical side, we develop tests for threshold effects in the context of dynamic heterogeneous panel data models with cross-sectionally dependent errors and illustrate, by means of Monte Carlo experiments, that they perform well in small samples. On the empirical side, using data on a sample of 40 countries (grouped into advanced and developing) over the 1965- 2010 period, we find no evidence for a universally applicable threshold effect in the relationship between public debt and economic growth, once we account for the impact of global factors and their spillover effects. Regardless of the threshold, however, we find significant negative long-run effects of public debt build-up on output growth. Provided that public debt is on a downward trajectory, a country with a high level of debt can grow just as fast as its peers in the long run.
