Advanced Cyclical Turning Point Indicators for Inflation in the WAEMU

This article uses Markov-Switching (MSVAR) models to develop advanced indicators of cyclical turning points in inflation within the WAEMU region. These indicators provide additional qualitative information compared to traditional quantitative inflation forecasting tools. The estimations yielded two main results: firstly, the detection of two (02) inflation regimes in the West African Economic and Monetary Union (WAEMU) (high regime and low regime); and secondly, that the exogenous determinants of inflation regimes (output gap, imported inflation, oil prices) lie outside the control means (money supply) of the Central Bank of West African State (BCEAO). Therefore, can or should the central bank alone assume the mission of price stabilization in the WAEMU? The results of this article open the debate on the institutions responsible for price stability in the WAEMU.