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Commodity Price Changes and Domestic Inflation in the CEMAC Zone: Evidence from Panel Cointegration

Njoupouognigni Moussa, Ndambendia Houdou
International Journal of Economics and Finance , Volume 13; doi:10.5539/ijef.v13n5p93

Abstract: In this study, we highlight the issue of the recent rise of food prices and other commodities on domestic inflation in the CEMAC zone. Results show that there is a long-run relationship between consumer price index, commodity prices and traditional determinants of inflation. Indeed, an appreciation of the nominal effective exchange rate and a rise of interest rate reduce domestic inflation while excessive money supply and a surge of commodity prices are potential sources of inflation in the region. Moreover, Pass-through from commodity price changes to domestic inflation in the region is incomplete because of the CFA Franc peg to Euro. An efficient use of the tools of monetary policy and a coordinated food policy on crops are more likely to reduce inflationary pressures in the region.
Keywords: commodity prices / Commodity Price Changes / Price Changes and Domestic Inflation

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