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Inflation and Macroeconomic Instability in Madagascar
Author(s) -
Azam JeanPaul
Publication year - 2001
Publication title -
african development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.654
H-Index - 32
eISSN - 1467-8268
pISSN - 1017-6772
DOI - 10.1111/1467-8268.00036
Subject(s) - economics , inflation (cosmology) , instability , exchange rate , volatility (finance) , economic stability , rational expectations , real interest rate , monetary policy , keynesian economics , macroeconomics , monetary economics , econometrics , physics , theoretical physics , mechanics
The relationships between inflation and macroeconomic instability are discussed analytically, using a simple monetary model with rational expectations, with an application to the case of Madagascar. The recent macroeconomic history of this country suggests that high inflation is correlated with high volatility of the inflation rate and the real effective exchange rate. The relevance of this observation is confirmed by an empirical analysis of the relationships between inflation, competitiveness and instability in Madagascar.