France and the CFA: Price and Money Supply Growth Determination: 1969–88

This paper examines the relationship between the rates of inflation and money stock growth in the CFA zone and France between 1969 and 1988. Theory holds, all other things being equal, that these inflation and money stock growth rates should be indistinguishable between France and the various CFA countries. Regression analysis confirms that the inflation rate in the CFA countries examined generally follows the predicted pattern while money supply data produces more mixed results. From this, it follows that there are no indications of an overvalued exchange between the CFA and France over the period covered