Title A dynamic model of inflation for Kenya, 1974-1996 / prepared by Dick Durevall and Njuguna S. Ndung'u

Published [Washington, D.C.] : International Monetary Fund, Research Dept., ©1999

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Description 1 online resource (36 pages) : illustrations Series IMF working paper ; WP/99/97 IMF working paper ; WP/99/97. 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 Bibliography Includes bibliographical references (pages 34-36) Notes 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 MiAaHDL digitized 2010 HathiTrust Digital Library committed to preserve pda MiAaHDL Print version record 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 Form Electronic book Author Ndung'u, Njuguna S International Monetary Fund. Research Department. ISBN 1451897804 9781451897807 1281600040 9781281600042

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