| dc.creator | Ndung'u, Njuguna S. | |
| dc.date | 2011-08-16T14:50:09Z | |
| dc.date | 2011-08-16T14:50:09Z | |
| dc.date | 1996 | |
| dc.date.accessioned | 2013-01-04T16:34:08Z | |
| dc.date.available | 2013-01-04T16:34:08Z | |
| dc.date.issued | 04-01-13 | |
| dc.identifier | Ndung'u, Njuguna S. (1996), Inflation in Kenya: an empirical analysis, Working paper no. 514, Nairobi: Institute for Development Studies, University of Nairobi | |
| dc.identifier | http://opendocs.ids.ac.uk/opendocs/handle/123456789/1096 | |
| dc.identifier | 324870 | |
| dc.identifier.uri | http://hdl.handle.net/11295/7532 | |
| dc.description | The paper analyses the dynamics of
inflation in Kenya by assessing the relative
importance of monetary and external factors. This is
done through a multivariate Granger-noncausality
tests and the decomposition of the forecast error
variance into variable specific innovations
Using Granger-noncausality tests the study finds
that monetary base growth, exchange rate movements,
real income growth, the foreign rate of inflation and
interest rate movements have significant effects on
inflation. The monetary base growth, interest rate1
and exchange rate movements have strong feedback
effects with inflation. This implies that a shock on
any of this variables, including the rate of inflation
will not peter out rapidly (not transitory) but will
have permanent effects. Broad money, M3, on the
other hand, is driven by inflation without feedback
effects. These results point to the differential impact
of the two money supply aggregates on the rate of
domestic inflation.
Using variance decomposition, the exchange rate was
found to be the most important variable accounting
for half of the innovations in the price level. The
paper thus concludes that exchange rate movements
are more important than money supply growth in
explaining Kenya's inflationary process. | |
| dc.language | en | |
| dc.publisher | Institute for Development Studies, University of Nairobi | |
| dc.relation | Working papers;514 | |
| dc.rights | http://creativecommons.org/licenses/by-nc-nd/3.0/ | |
| dc.rights | Institute for Development Studies, University of Nairobi | |
| dc.subject | Economic Development | |
| dc.subject | Finance | |
| dc.title | Inflation in Kenya: an empirical analysis | |
| dc.type | Series paper (non-IDS) | |
