Impact of international income, prices and monetary shocks on real exchange rate in eight African economies: An empirical study

This study characterizes imported inflation in eight African countries through the effect of income and consumer prices index in OECD countries shocks, world price of oil shock and Federal funds effective rate shock on real exchange rate between 1970 and 2007, using a SVAR Model. We develop theoretical and empirical models and the results suggest that real exchange rate is exposed to these shocks. In this context, the countries exposed must reform their economies in order to be less dependent to the exports of raw materials and the imports of goods and services. The production of domestic goods and services conducts to the substitution of imports by these goods in period of inflation in industrialized countries and decreases imported inflation.