The Inflation-Growth Relationship in SSA Inflation-Targeting Countries

Mavikela, Nomahlubi; Mhaka, Simba; Phiri, Andrew

doi:10.2478/subboec-2019-0011

Cited by 10 publications

(17 citation statements)

References 65 publications

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“…They concluded that the relationship between output growth and general prices is linear and negatively related in Ghana. For Mavikela, et, al, (2018) inflation has been directly linked with growth at high prices in Ghana from 2001 to 2016 by the use of quarterly empirical data.…”

Section: Review Of Relevant Literaturementioning

confidence: 99%

“…The CC-BY License | 118 majority of the literature has concluded on a negative relationship between some macroeconomic indicators such as inflation and GDP growth rate in Ghana at all levels (Enu et al, 2013). However, Mavikela et al, (2018) examined how inflation and economic growth are related in South Africa and Ghana and concluded on a positive effect of inflation on GDP growth in Ghana at a high inflationary level. Mbulawa (2015) also concluded on the positive effect of inflation on GDP growth in Botswana.…”

Section: Introductionmentioning

confidence: 99%

“…From the review of some previous studies, it is seen that there have been some conflicting empirical results about the impact of inflation on the GDP growth rate in Ghana, as different conclusions have been reached with no clear identification of the relationship between inflation and GDP growth (Frimpong & Oteng-Abayie, 2010). For instance, studies by Mavikela, et al (2018) concludes that inflation has a positive effect on GDP growth rate and Enu, et al (2013) concludes that inflation harms the GDP growth rate. Given this, an examination of the impact of inflation, using 1986 to 2018 annual time series data, with consideration of physical capital, money supply, and government expenditure, as control variables, on GDP growth in Ghana is imperative.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

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: Review Of Relevant Literaturementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Impact of Inflation on Gross Domestic Product Growth in Ghana

Kankpeyeng¹,

Maham²,

Abubakar³

2021

Ghana J. Dev. Stud.

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“…From the studies that primarily focused on the relationship between inflation and economic growth, a negative relationship was found by Quartey (2010); Mamo (2012) and Gokal and Hanif (2004). However, some studies found that inflation has no impact on economic growth (Faria & Carneiro, 2001;Sidrauski, 1967;Svigir & Miloš, 2017) whilst Mavikela, Mhaka, and Phiri (2019) found that inflation is positively related to growth at high inflation levels in Ghana and Tobin (1965) established a positive impact of inflation on growth. These studies found different and inconclusive results with regard to the relationship between inflation and economic growth.…”

Section: Theoretical and Empirical Literaturementioning

confidence: 99%

Inflation and Economic Growth in Zimbabwe is there Any Inflation Threshold Level?

Runganga

2020

International Journal of Applied Economics, Finance and Account

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This study examines the existence of threshold level as well as the relation between inflation and economic growth in Zimbabwe using annual data for the period 1981 to 2018. While the Dynamic Ordinary Least Squares (DOLS) shows that inflation has a negative impact on economic growth and the share of gross capital formation in gross domestic product has positive impact on economic growth, Engle-Granger test shows that there is long-run relationship between the variables. The conditional least squares shows that there is a non-linear relationship between inflation and economic growth. The threshold level of inflation above which additional increase in inflation slows economic growth is 4 per cent. Inflation below the threshold level of 4 per cent has significant positive impact on economic growth but this effect turns out to be negative when inflation rise above the threshold level of inflation. The findings also show that low inflation has a positive impact on economic growth. The study results imply that policy makers should ensure that inflation is kept below the threshold level of 4 per cent and this should be the inflation target in order to achieve higher economic growth. Funding: This study received no specific financial support. Competing Interests: The author declares that there are no conflicts of interests regarding the publication of this paper. 1 While the inflation-growth trade-off was found to hold in the 1950's and 1960's, stagflation experienced in the 1970's made the Phillips curve fell apart, not surprisingly raising considerable debate on the existence and natures of the inflation-growth relationship. Most advanced economies started to experience high inflation simultaneously with high unemployment, a relationship that contradicted the Phillips curve.

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“…To what level can the inflation rate be targeted so that economic growth can be further optimized. This question is important to be asked to provide an economic policy foundation that consistently supports the main development goals, namely community welfare (Carrera, 2017;Mavikela, Mhaka, & Phiri, 2018).…”

Section: Introductionmentioning

confidence: 99%

Optimal Price Level Under Slowing Economic Performance Using Simple Growth-Inflation Threshold Models

Rasyid

Kristina

Purwanti

2021

KSS

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The purpose of this study was to evaluate the threshold of inflation that is tolerant of Indonesia’s economic growth rate. The basic question to be answered was what level of inflation is safe enough for economic growth. To answer this question, this study used Indonesian macroeconomic data, specifically data on inflation and economic growth between 1969-2017 sourced from the Central Statistics Agency and Bank Indonesia. The data analysis method used was a threshold regression model that was repeated manually by entering an acceptable inflation simulation value based on inflation experience in Indonesia. The simulation results showed that the inflation threshold that is safe for growth is around 7 to 8 percent per year. However, the model showed that inflation of 3 percent is the optimal level for growth. One concludes that an inflation rate of around 3 percent can be used as a guide in determining the inflation target in Indonesia. Keywords: growth, inflation, stability, threshold

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The Inflation-Growth Relationship in SSA Inflation-Targeting Countries

Cited by 10 publications

References 65 publications

Impact of Inflation on Gross Domestic Product Growth in Ghana

Impact of Inflation on Gross Domestic Product Growth in Ghana

Inflation and Economic Growth in Zimbabwe is there Any Inflation Threshold Level?

Optimal Price Level Under Slowing Economic Performance Using Simple Growth-Inflation Threshold Models

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