justinmfaume/inflation-malawi-vecm

Econometric analysis of the impact of agricultural supply chain disruptions on headline inflation in Malawi (1970–2024) using a Vector Error Correction Model (VECM). Repository contains the dissertation manuscript, STATA code, and supporting empirical analysis. # The Impact of Agricultural Supply Chain Disruptions on Headline Inflation in Malawi **Undergraduate Dissertation | The Catholic University of Malawi | 2026** **Vector Error Correction Model (VECM) | Annual Time-Series Data | 1970–2024** --- ## Author **Justin Mfaume** Bachelor of Social Sciences in Economics — Marginal Distinction (77%) Minor in Statistics Best Academic Performance Award (2025) First student in the Economics Department to achieve a Distinction since 2019 **Contacts** Email:justinmfaume1964@gmail.com LinkedIn:linkedin.com City:Lilongwe, Malawi **Supervisor:** Mr. P. Mvula — Lecturer and Dissertation Supervisor, Department of Economics, The Catholic University of Malawi **Software Used:** Stata 17 · Microsoft Excel --- ## Abstract Inflation in Malawi is not an abstract statistic. It is the transport fare that doubled before wages moved, the fuel queue that delays inputs from reaching farms, and the exchange rate movement that raises landing costs before any policy response arrives. At the centre of these dynamics sits agriculture, a sector generating over 80% of export earnings, determining foreign exchange availability, shaping the economy's capacity to import fuel and fertiliser, and ultimately governing the conditions under which goods move from farms to markets to households. This study investigates the impact of agricultural supply chain disruptions on headline inflation in Malawi using annual time-series data from 1970 to 2024. A Vector Error Correction Model (VECM) captures dynamic relationships between headline inflation, climatic shocks proxied by annual rainfall, fertiliser prices, fuel prices, and exchange rate movements. Johansen cointegration tests confirm stable long-run equilibrium relationships among variables integrated of order one. Exchange rate depreciation emerges as the dominant long-run driver of inflation, inseparable from agricultural performance given the sector's control over export earning …