Munich Personal RePEc Archive

Demystifying inflation dynamics in Rwanda: an ARMA approach

NYONI, THABANI (2019): Demystifying inflation dynamics in Rwanda: an ARMA approach.

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Abstract

This research uses annual time series data on inflation rates in Rwanda from 1967 to 2017, to model and forecast inflation over the next decade using ARMA models. Diagnostic tests indicate that W is I(0). The study presents the ARMA (3, 0, 0) model [which is nothing but an AR (3) model]. The diagnostic tests further imply that the presented optimal ARMA (3, 0, 0) model is stable and acceptable. The results of the study apparently show that W will be approximately 7.45% by 2020. Policy makers and the business community in Rwanda are expected to take advantage of the anticipated stable inflation rates over the next decade.

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