Short-Run and Long-Run Inflation and Economic Growth Nexus in Ghana

Ahiakpor, Ferdinand; Akapare, IA

doi:10.4314/gjds.v11i2.3

Cited by 8 publications

(10 citation statements)

References 27 publications

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“…This means that a 1% increase in inflation will decrease GDP growth by 4.46%. This result confirms the results of Enu, et al, (2013), Ahiakpor &Akapare (2012), andAndinuur (2013). But contradicts the findings of Mavikela, et al, (2018).…”

Section: Vector Autoregressive Resultssupporting

confidence: 92%

Impact of Inflation on Gross Domestic Product Growth in Ghana

Kankpeyeng¹,

Maham²,

Abubakar³

2021

Ghana J. Dev. Stud.

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This paper examines the impact of inflation and other macroeconomic variables such as physical capital, government expenditure, and money supply on GDP growth in Ghana. The study obtained data from the World Development Indicators for the period 1986-2018 and employed vector autoregressive (VAR) models for the analysis. The results showed that general inflation, low inflation rates, physical capital, and money supply have positive, statistically, significant, effect on GDP growth, while, government expenditure and high inflation have negative, statistically significant, effect on GDP growth for the period studied. The study concludes that GDP grows positively at a general level of inflation and low rates of inflation but grows negatively at a high rate of inflation in Ghana. The study, therefore, recommends that government should implement monetary and fiscal policies that will help keep inflation rates low and redirect her spending to the productive sectors in the country to enhance GDP growth.

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Section: Vector Autoregressive Resultssupporting

confidence: 92%

Impact of Inflation on Gross Domestic Product Growth in Ghana

Kankpeyeng¹,

Maham²,

Abubakar³

2021

Ghana J. Dev. Stud.

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“…The World Bank ( 2013) expected Ghana's GDP to rise at least by 8% in order to accomplish the Millennium Development Goals but the real growth averaged around 5% since 1990. Ahiakpor and Akapare (2014) discovered that the reason behind Ghana's economic growth being inconsistent is because Ghanaian monetary policy makers have been failing to achieve its inflation target over the period 1986 to 2012. This means that the actual inflation over that period in Ghana has been higher than the expectation inflation.…”

Section: Empirical Literaturementioning

confidence: 99%

The Effects of Expectation Inflation on Aggregate Demand: Examining the South African Inflation Expectation Channel of South African Monetary Policy

Ncanywa

Ralarala

2020

J. Rev. Global Econ.

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South Africa targeted inflation since February 2000 as its monetary policy framework to ensure long-run price stability and continues to pursue a target of 3-6% for headline CPI inflation. Monetary policy emphasises the importance of promoting economic growth that can be sustained and maintenance of low inflation in an economy. Therefore, the paper seeks to check whether a relationship between economic growth (GDP) and expectation inflation exists. The autoregressive distributive lag (ARDL) econometric methodology was employed to achieve the objectives. The ARDL bounds test found that there is a long-run cointegration between GDP and expectation inflation. Moreover, the ARDL results revealed that in the long run expected inflation had a negative significant effect on GDP. This implies that lower expectation inflation could stimulate economic growth. It is recommended that South Africa should continue to target inflation because its target band of 3% to 6% keep policy makers on the loop.

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“…However, given the absence of consistent data on import and producer prices we adopt a standard inflation model where the exchange rate enters as one of the determinants. A review of the literature examining determinants of consumer prices in Ghana (Bawumia and Abradu-Otoo 2002;Ocran 2007;Sanusi 2010;Adu and Marbuah 2011;Gyebi and Boafo 2013;Ahiakpor and Akpare 2014;Adu et al 2015;Adom et al 2015) reveal that both monetary and structural factors are important. In line with Adom et al (2015), the theoretical model is deduced as follows.…”

Section: Theoretical Modelmentioning

confidence: 99%

Exchange rate pass-through to consumer prices in Ghana: is there asymmetry?

Amoah

Aziakpono

2018

IJOEM

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Purpose The purpose of this paper is to reexamine the speed and magnitude of exchange rate pass-through (ERPT) to consumer prices in Ghana. Design/methodology/approach The Johansen Maximum Likelihood approach is employed in the estimation of different models of symmetric and asymmetric ERPT. Specifically asymmetric ERPT models with respect to the direction and size of exchange rate changes are estimated. Findings Results reveal that even though a depreciation in the nominal effective exchange rate will lead to an increase of consumer prices in the long-run, it is not statistically significant. Evidence also suggests a significant asymmetry with respect to direction and size of exchange rate changes. This indicates that the right ERPT model is an asymmetric model. Specifically ERPT is found to be incomplete but relatively higher in periods of depreciation than in periods of appreciation; that is 53 percent against 3 percent. ERPT is also higher during episodes of large changes (about 51 percent). Research limitations/implications It would have been interesting to analyze the impact on consumer prices through changes in import prices. That approach was not adopted due to lack of consistent data on import prices in Ghana. Practical implications It is imperative that the monetary authorities critically monitor exchange rate movements in order to be able to take swift policy action so as to counteract any inflationary pressures from the external sector. In particular, much attention should be paid to events and arrangements that could result in large depreciation of the exchange rate. Originality/value While previous studies have assumed a symmetric ERPT model for Ghana, this paper is unique in that it investigates the most appropriate model for examining ERPT in Ghana whether symmetric or an asymmetric.

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Short-Run and Long-Run Inflation and Economic Growth Nexus in Ghana

Cited by 8 publications

References 27 publications

Impact of Inflation on Gross Domestic Product Growth in Ghana

Impact of Inflation on Gross Domestic Product Growth in Ghana

The Effects of Expectation Inflation on Aggregate Demand: Examining the South African Inflation Expectation Channel of South African Monetary Policy

Exchange rate pass-through to consumer prices in Ghana: is there asymmetry?

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