Modelling the effect of exchange rate on inflation in Ghana

Asuamah Yeboah, Samuel (2017): Modelling the effect of exchange rate on inflation in Ghana.

Abstract

The paper examines the exchange rate-inflation nexus for Ghana during the period 1964 to 2013 using annual data. The analysis of the results performed by using the Johansen test (JH), Vector Error Correction (VECM) test, and the Ordinary least square test (OLS). The findings of the result based on the JH, and VECM tests indicate stable long run and short run link between exchange rates and inflation. The results of the OLS test indicate there is positive link between exchange rates and inflation. Policy makers should take into account the findings of the study in order to control inflation. Future studies should consider causality and structural break issues as well as panel study.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inflation, exchange rates, money supply, long run
• Subjects: E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models; F - International Economics > F3 - International Finance > F31 - Foreign Exchange; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O24 - Trade Policy ; Factor Movement Policy ; Foreign Exchange Policy; P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P24 - National Income, Product, and Expenditure ; Money ; Inflation; P - Economic Systems > P4 - Other Economic Systems > P44 - National Income, Product, and Expenditure ; Money ; Inflation

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