Analyzing Determinants of Inflation When there Are Data Limitation:The Case of Sierra Leone

This paper examines the determinants of inflation in Sierra Leone using a structural vector autoregression (VAR) approach to help forecast inflation for operational purposes. Despite data limitations, the paper accurately models inflation in Sierra Leone. As economic theory predicts, domestic inflation is found to increase with higher oil prices, higher money supply, and nominal exchange rate depreciation. The paper then employs a historical decomposition approach to pinpoint the sources of a marked decline in inflation in 2006 and assesses its forecasting properties. Overall, the model serves as a useful addition to the toolkit for analyzing and forecasting inflation in countries with limited data availability.Data analysis;Economic forecasting;Oil prices;Exchange rate depreciation;Forecasting models;inflation, monetary policy, central bank, money supply, aggregate demand, price level, monetary fund, forecasting inflation, inflation rate, annual inflation, foreign exchange, open market operations, money growth, inflation dynamics, expansionary monetary policy, price inflation, increase in inflation, annual inflation rate, inflation response, monetary zone, high inflation, money balance, monetary economics, reduction in inflation, discretionary monetary policy, monetary transmission, money demand, actual inflation, real variables, monetary policy reaction function, monetary transmission mechanism, rational expectations, wage-price, monetary restraint, monetary policy transmission mechanism, monetarism, monetary policy transmission mechanisms, discount rates, monetary target, monetary statistics, adaptive expectations hypothesis, monetary policy objectives, government securities, adaptive expectations, price stability, monetary reaction function, nominal interest rates, terms of trade, effect of money growth, monetary policy operations, inflation targeting, intermediate monetary target, persistent high inflation

The Impact of External Indebtednesson Poverty in Low-Income Countries

This paper explores the relationship between external debt and poverty. A number of observers have argued that high external indebtedness is a major cause of poverty. Using the first-differenced general method of moments (GMM) estimator, the paper models the impact of external debt on poverty, measured by life expectancy, infant mortality, and gross primary enrollment rates, while duly taking into account the impact of external debt on income. The paper thus endeavors to bring together the literature that links external debt with income growth and poverty. The main conclusion is that once the effect of income on poverty has been taken into account, external indebtedness indicators have a limited but important impact on poverty.Poverty;External debt;HIPC Initiative;Economic growth;mortality rate, life expectancy, debt service, infant mortality, infant mortality rate, external indebtedness, debt overhang, birth, debt relief, debt service to exports, life expectancy at birth, net present value of debt, external debt indicators, debt crisis, stock of debt, debt service payment, debt service payments, debt burden, nominal stock of debt, debt servicing, ratio of debt, debt service to export, foreign debt, external borrowings, external resources, debt sustainability, external finance, debt stocks, debt reduction, debt stock, debt problems, mortality rates, external debts, ratio of debt service to exports, infant mortality rates, number of deaths, debt data, multilateral debt relief, relief mechanisms, international debt, traditional debt relief, debt sustainability analyses, external debt burden, debt relief mechanisms, births, lower life expectancy, live birth, international lending, multilateral debt, external debt stock, traditional debt relief mechanisms, debt service reduction, relief debate

Assessing Competitiveness After Conflict

This paper assesses competitiveness in the case of the Central African Republic, a postconflict country. The paper presents several conventional techniques for assessing competitiveness, namely the real exchange rate and recent trade performance. Several other measures are considered, in particular transport costs and governance measures, which may be more effective in capturing the obstacles to competitiveness posed by the poor security environment and weak institutions common to many post-conflict situations. The real exchange measure and trade measures suggest some mild erosion of competitiveness in recent years, while the other measures indicate that the competitiveness challenges faced by the Central African Republic are much deeper.Trade;Transport;Governance;transport costs, exchange rate, exchange rates, transport cost, real exchange rates, real exchange rate, terms of trade, trade performance, external trade, trade deficit, home currency, export performance, balance of payments, real effective exchange rate, exchange rate policy, investor protection, international trade, foreign exchange, exchange rate movements, nominal exchange rate, effective exchange rate, effective exchange rates, movements in exchange rates, factor markets, open economy, fixed exchange rate, trade barriers, equilibrium exchange rate, trade data, market exchange rate, export earnings, domestic prices, trade reforms, world prices, exchange rate behavior, exchange rate misalignment, trade liberalization, domestic production, imported goods, exchange rate changes, commercial policy, tariff rates, external tariff, per capita income, competitive market, competitive position, quantitative restrictions, monetary union, export diversification, nontariff barriers, external shocks, trade costs, common market, trade protection, external protection