caa a22 4500 39755933X CHVBK 20180308164812.0 cr unu---uuuuu 161202e199606 xx s 000 0 eng 10.1093/oxfordjournals.jae.a020906 doi (NATIONALLICENCE)oxford-10.1093/oxfordjournals.jae.a020906 Small Country Experiences with Exchange Rates and Inflation: the Case of Botswana [Elektronische Daten] [J.K. Atta, K.R. Jefferis, I. Mannathoko] The dominant influence of South African goods on the Bostwana CPI basket leads to the expectation that South African prices have a significant role in determining prices in Bostwana. This paper examine Botswana's price and inflation relationships and their interation. Cointegration analysis is used to develop a dynamic error correction model that established the link between long run equilibrium prices and short run inflation. Results show that the exchange rate (and South African prices) rather than money is cointegrated with prices, supporting theoretical predictions of a dominant long term equilibrium relationship between prices and the exchange rate in a pegged exchange rate regime with capital controls. In the short run both domestic and imported inflationary pressures determine growth in the price level each month. This suggests monetary, exchange rate and fiscal policy can be used to temper inflation in the short run. Changes in the exchange rate and prices will, however, only have short term price competitiveness effects, over time complete adjustment back to the equilibrium real exchange rate occurs. © Center for the Study of African Economics Articles nationallicence Atta J.K. University of Botswana and Bank of Botswana aut Jefferis K.R. University of Botswana and Bank of Botswana aut Mannathoko I. University of Botswana and Bank of Botswana aut Journal of African Economies Oxford University Press 5/2(1996-06), 293-326 0963-8024 5:2<293 1996 5 jafeco https://doi.org/10.1093/oxfordjournals.jae.a020906 text/html Onlinezugriff via DOI 1 research-article jats NATIONALLICENCE 856 40 https://doi.org/10.1093/oxfordjournals.jae.a020906 text/html Onlinezugriff via DOI NATIONALLICENCE 700 1- Atta J.K. University of Botswana and Bank of Botswana aut NATIONALLICENCE 700 1- Jefferis K.R. University of Botswana and Bank of Botswana aut NATIONALLICENCE 700 1- Mannathoko I. University of Botswana and Bank of Botswana aut NATIONALLICENCE 773 0- Journal of African Economies Oxford University Press 5/2(1996-06), 293-326 0963-8024 5:2<293 1996 5 jafeco Metadata rights reserved CC BY-NC-4.0 http://creativecommons.org/licenses/by-nc/4.0 nationallicence BK010053 XK010053 XK010000 NATIONALLICENCE NATIONALLICENCE NL-oxford