Causes of Inflation In The Sudan: An Empirical Analysis

Abstract

The objective of this study is to analyze the factors that led to inflation in the Sudan by applying the cointegration1 model over the period 1994-2016. The ADF results show that all variables stationary at first difference except the GDP. The finding of the study show long run equilibrium between the variables. The result shows that a one-percentage appreciation of nominal exchange rate causes inflation to fall while a similar increase in money supply or in real GDP causes inflation to rise. A one-percentage increase in openness of the economy will not cause an increase in domestic inflation.