Inflation and monetary policy in selected West and Central African countries

Abstract

This paper studies the conduct and performance of monetary policy in five West and Central African countries: Cameroon, Cote d'Ivoire, Gabon, Ghana and Nigeria. The first three are members of the CFA Zone and maintain a fixed peg vis-a-vis the French franc. The other two have recently opted for a more flexible exchange rate regime. No general conclusion can be drawn on the monetary policy-exchange rate policy nexus. Estimates of the offset coefficient are significantly different from (negative) one but VAR estimation results on the ability of the monetary authority to pursue an independent inflation target are mixed. The monetary authorities of Ghana and Nigeria sterilize the accumulation of net foreign assets to a limited degree; no such evidence exists for CFA Zone members.