Sub-Saharan African Countries’ Dependence on the External Inflation: Empirical Evidence Using Copulas

The purpose of this study is to estimate the dependence between the inflation, given by the Consumer Price Index (CPI), in part of the Sub-Saharan African (SSA) countries with the CPI observed in the Euro Monetary Zone (EMZ) countries. To achieve this goal, we adopted the empirical methodology of Copulas, which was used in the analysis of the CPI, in bivariate models context. The results were controlled by the countries which adopted fixed and flexible exchange rate regimes. They suggest that the CPI in the sampled countries which adopted fixed exchange rate regimes, as Sao Tome and Principe, Benin, the countries of the West African Economic and the Monetary Union (WAEMU), Burkina Faso, Ivory Coast and Togo had more significant dependence relationship with the Euro. On the other hand, the countries which adopted flexible exchange rate regimes as Cape Verde, Burkina Faso, Guinea-Bissau, Mali, Senegal and Togo presented dependence on upper tail of the distribution, i.e., for the periods of increasing in the CPI. Maybe, it means that those countries had inelastic demands for tradable goods coming from the EMZ countries. We conclude that the imported inflation is an important issue to be considered by the policy makers of developing countries such as the studied, mainly for those which adopted fixed regimes, eventually change to flexible exchange regimes.