From the book "Economic Integration, Currency Union, and Sustainable and Inclusive Growth in East Africa".
This study examines the inflation rates from the five countries that belong to the East African Community and which recently signed a protocol outlining their plans for launching a monetary union within ten years. The aim is to examine the persistence in the inflation levels. As it is argued by the literature regarding monetary unions, countries hoping to form a union should present similar inflation patterns. Our study shows that that the countries present non-mean reversion, confirming that shocks will not recover in the long run. Moreover, fractional cointegration relationships are found between all countries with the exception of Tanzania.