Inflation Forecasting, Central Bank Independence and Price Stability: An analysis of Zimbabwe - Softcover

Mujutywa-Shayanewako, Melania

 
9783846525470: Inflation Forecasting, Central Bank Independence and Price Stability: An analysis of Zimbabwe
Softcover
ISBN 10: 3846525472 ISBN 13: 9783846525470
Verlag: LAP LAMBERT Academic Publishing, 2011

Inhaltsangabe

The accuracy of inflation forecasting has been a challenge in most developing countries which do not have high frequency data.This study evaluates the performance of leading bivariate and trivariate models of inflation in forecasting inflation for Zimbabwe. Root Mean Square Forecast Errors (RMSFE) of the benchmark autoregressive model are compared with those of bivariate and trivariate vector autoregressions. The pseudo-out-of-sample forecasting results show that (1) the trivariate model using lags of inflation, crop production index and the parallel market exchange rate forecast inflation better (2) the term structure of interest rates also performs well and (3) monetary aggregates fare badly. Further, the study analyses the institutional set-up of the Reserve Bank of Zimbabwe (RBZ) to determine its independence. Results show that political interests have been driving the monetary policy and this has undermined the credibility of the central bank. Even if independence is not the complete answer, it is at least suggestive that a more autonomous central bank would be effective even though it is neither necessary nor sufficient by itself for achieving and maintaining low inflation.

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Reseña del editor

The accuracy of inflation forecasting has been a challenge in most developing countries which do not have high frequency data.This study evaluates the performance of leading bivariate and trivariate models of inflation in forecasting inflation for Zimbabwe. Root Mean Square Forecast Errors (RMSFE) of the benchmark autoregressive model are compared with those of bivariate and trivariate vector autoregressions. The pseudo-out-of-sample forecasting results show that (1) the trivariate model using lags of inflation, crop production index and the parallel market exchange rate forecast inflation better (2) the term structure of interest rates also performs well and (3) monetary aggregates fare badly. Further, the study analyses the institutional set-up of the Reserve Bank of Zimbabwe (RBZ) to determine its independence. Results show that political interests have been driving the monetary policy and this has undermined the credibility of the central bank. Even if independence is not the complete answer, it is at least suggestive that a more autonomous central bank would be effective even though it is neither necessary nor sufficient by itself for achieving and maintaining low inflation.

Biografía del autor

Melania Mujutywa-Shayanewako, Studied Master of Economics in the field of International Economics, Public Policy and Taxation at Yokohama National University, Japan: Chief Economist, Ministry of Economic Planning and Investment Promotion, Zimbabwe

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Verlag
LAP LAMBERT Academic Publishing
Erscheinungsdatum
2011
Sprache
Englisch
ISBN 10 
3846525472
ISBN 13 
9783846525470
Einband
Tapa blanda
Anzahl der Seiten
112
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Verantwortliche Person
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