The impacts of oil prices and exchange rates on the inflation for selected African countries

ABSTRACT In this thesis, the effects of oil prices and exchange rates on consumer prices in selected African countries, Ghana, Kenya, Nigeria and South Africa are empirically examined. For this purpose, Vector autoregressive (VAR) model is used to analyze time series properties of variables. Depending on the availability of data, quarterly data covering the period 1985: 04-2018: 03 is employed in the study. According to the findings obtained from the study, the effect of the exchange rate on inflation is found to be statistically significant for all countries excluding Nigeria. According to impulse-response and variance decomposition results, Ghana is the country most affected by the changes in the exchange rate. However, when other countries are considered, the findings show that the pass-through effect is incomplete and that the changes in exchange rates are not fully reflected in domestic prices. When the effect of oil prices on inflation is evaluated, it is seen that oil shocks are only important for South Africa and they are insignificant for Ghana, Kenya and Nigeria. Anahtar Kelimeler: Döviz kurları, petrol fiyatları, Enflasyon, VAR modeli, Afrika ülkeleri. Keywords: Exchange rates, Oil Prices, Inflation, VAR model, African countries.