The African Business Review May-Jun 2014 | Page 14

capture expectations on inflation, we specify a dynamic panel
model for prices in WAMZ. We employed a panel data analysis
because it considers various cross sectional units (countries in
WAMZ) over time. This study covers four countries in WAMZ
(The Gambia, GHANA, Nigeria and Sierra Leone) from 1980
to 2011. Based on the direct view of banking crises, we employed
the banking crises dates as presented by Demirgüç-Kunt and
Detragiache (2005), Jácome (2008), Laeven and Valencia (2008)
and Reinhart and Rogoff (2008). These crises periods are based
on expert judgments and they are used as control variables
to determine its effect on inflation. Following Martinz Periz
(2000 and 2002) and Kaehler (2010) we adopted the modified
monetarist inflation theory that is augmented with crises dummy.
Inflation in this case will depend on a vector of explanatory
variables and a control variable. The dummy control variable
employed in this study is the banking crises which takes the
value of 1 during crises and 0 otherwise. The empirical model
is specified