Advances in Management and Applied Economics

Sources of Inflation in Developing Countries: Evidence from some West African Countries

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• Abstract

  The paper examines the determinants of inflation in some West African countries. Using the Johansen technique and time series between 1970q1 and 2010q4 the study determines whether inflation in these African countries is mainly imported (via import prices and exchange rate movements) or predominantly a function of domestic factors. Our results indicated that money supply, exchange rate movements, income and foreign prices have significant influences on the inflation rate in the long run. Also, short run dynamics based on an error correction model indicated that money supply, exchange rate and income, and in some countries foreign prices have notable effects on inflation.