A dynamic model of inflation for Kenya, 1974-1996 /

A dynamic model of inflation for Kenya, 1974-1996 /

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Bibliographic Details
Author / Creator:	Durevall, Dick.
Imprint:	[Washington, D.C.] : International Monetary Fund, Research Dept., ©1999.
Description:	1 online resource (36 pages) : illustrations
Language:	English
Series:	IMF working paper ; WP/99/97 IMF working paper ; WP/99/97.
Subject:	Inflation (Finance) -- Kenya -- Econometric models. Foreign exchange -- Kenya -- Econometric models. Terms of trade -- Kenya -- Econometric models. Money supply -- Kenya. Interest rates -- Kenya. Foreign exchange -- Econometric models. Inflation (Finance) -- Econometric models. Interest rates. Money supply. Terms of trade -- Econometric models. Kenya.
Format:	E-Resource Book
URL for this record:	http://pi.lib.uchicago.edu/1001/cat/bib/12496076

Hidden Bibliographic Details
Other authors / contributors:	Ndung'u, Njuguna S. International Monetary Fund. Research Department.
ISBN:	1451897804 9781451897807 1281600040 9781281600042
Notes:	Includes bibliographical references (pages 34-36). Restrictions unspecified Electronic reproduction. [Place of publication not identified] : HathiTrust Digital Library, 2010. Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. http://purl.oclc.org/DLF/benchrepro0212 digitized 2010 HathiTrust Digital Library committed to preserve Print version record.
Summary:	The objective of this paper is to model and explain inflation in Kenya over the period 1974 to 1996. To achieve this goal, we develop a single-equation error correction model. The period of study encompasses a number of policy changes and external shocks that are likely to have affected inflation. Import substitution, the development strategy prevalent in the 1970s, was partially dismantled during the 1980s as several structural adjustment programs were implemented, and in the beginning of the 1990s there was a large-scale liberalisation of the economy. This entailed deregulation of the financial sector, removal of controls on retail and producer prices, and liberalisation of the current and capital accounts of the balance of payments. Exchange rate policy also changed; in 1982 a crawling peg replaced the adjustable peg, and in 1993 the Kenyan shilling started to float. In addition, several external shocks such as the oil-price shocks in the 1970s, coffee booms in 1976/77, 1986 and 1993, and donors' foreign aid embargo in 1991/92 hit the economy. Hence, finding an empirically stable and parsimonious model that describes the evolution of Kenya's inflation constitutes a major challenge.
Other form:	Print version: Durevall, Dick. Dynamic model of inflation for Kenya, 1974-1996. [Washington, D.C.] : International Monetary Fund, Research Dept., ©1999

Description
Summary:	This paper analyses the dynamics of inflation in Kenya during 1974-96, a period characterized by external shocks and internal disequilibria. By developing a parsimonious and empirically constant error correction model the paper finds that the exchange rate, foreign prices, and terms of trade have long-run effects on inflation, while the money supply and interest rate only have short-run effects. The dynamics of inflation are also found to be influenced by food supply constraints. Moreover, inertia is important for the period up to 1993, when about 40 percent of current inflation was transmitted to the next quarter. After 1993 inertia drops to about 10 percent.
Physical Description:	1 online resource (36 pages) : illustrations
Format:	Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002.
Bibliography:	Includes bibliographical references (pages 34-36).
ISBN:	1451897804 9781451897807 1281600040 9781281600042