Commodity Prices and Monetary Dynamics in Zambia
Commodity Prices and Monetary Dynamics in Zambia
| Autoři: | Nundo Chilima |
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| Publikováno v: | IES Working Papers 11/2026 |
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| Klíčová slova: | Commodity prices; Copper-to-oil ratio; Exchange-rate pass-through; Monetary policy; Sign-restricted local projections; State dependence; Zambia |
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| JEL kódy: | E31, E52, F41, Q43, C32 |
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| Citace: | Chilima N. (2026): " Commodity Prices and Monetary Dynamics in Zambia " IES Working Papers 11/2026. IES FSV. Charles University. |
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| Abstrakt: | This paper examines how external commodity shocks, exchange rate depreciation, and monetary policy shocks shape macroeconomic adjustment in Zambia. Using monthly data from 2010 to 2024, the analysis applies sign-restricted local projections to trace the responses of output, inflation, exchange rates, policy rates, and lending conditions. The copper-to-oil ratio serves as the baseline indicator of Zambia’s external commodity position because it captures copper export-price gains relative to oil import costs. Robustness checks use separate copper-price and oil-price systems, a longer signrestriction window, state-dependent specifications, and Bayesian VAR evidence. The results show that favorable copper-to-oil shocks lower inflation, ease lending conditions, support kwacha appreciation, and gradually raise output. Exchange-rate depreciation shocks generate persistent inflationary effects, confirming strong exchange-rate passthrough in Zambia’s import-dependent economy. Monetary-policy shocks reduce output and affect financial conditions, but do not produce a clean disinflationary response in the linear baseline, indicating constrained transmission and price-puzzle dynamics. State-dependent results show that transmission varies across inflation and commodity regimes, with weak commodity conditions amplifying inflationary and exchange-rate stress. The findings imply that stabilization in Zambia requires stronger external buffers, credible monetary-fiscal coordination, deeper financial intermediation, and reduced exposure to imported cost shocks. |
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| Ke stažení: | wp_2026_11_chilima |
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