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Inflation dynamics in Jamaica: Evidence from the ARMA methodology

NYONI, THABANI (2019): Inflation dynamics in Jamaica: Evidence from the ARMA methodology.

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Abstract

This research uses annual time series data on inflation rates in Jamaica from 1968 to 2017, to model and forecast inflation using ARMA models. Diagnostic tests indicate that JINF is I(0). The study presents the ARMA (1, 0, 0) model, which is the same as an AR (1) process. The diagnostic tests further imply that the presented optimal ARMA (1, 0, 0) model is stable and acceptable for forecasting inflation rates in Jamaica. The results of the study apparently show that JINF will be approximately 11.42% by 2020. Policy makers in Jamaica are expected to the take the necessary action with regards to maintaining a low and stable inflation rate over the next decade and even beyond.

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