Theoretically proposed policy instrument to resolve the negative effect of inflation flow into a positive macroeconomic growth: the case of Sierra Leone economy

Tweneboah Senzu, Emmanuel (2020): Theoretically proposed policy instrument to resolve the negative effect of inflation flow into a positive macroeconomic growth: the case of Sierra Leone economy.

Abstract

The paper empirically examines the predictive factor of the inflation rate observed to be the vector force of macroeconomic growth decline or rise in the Sierra Leone economy. Thereby adopting a statistical tool of an exogenous univariate auto-regression integrated moving average to build a forecasting model between the open-market-exchange rate and the inflation rate to establish the degree of correlation effect as a basis to theoretically prescribe a policy instrument, a means to maximize economic benefit for sustainable macroeconomic growth. This leads to an established finding that an average price shift of +/- 0.032 of the leone currency price with the US dollar at the open market will always cause a percentage point change of inflation to the endogenous economy when all other factors remain constant.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inflation, Exchange rate, policy instrument, regression models, monetary policy
• Subjects: E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E17 - Forecasting and Simulation: Models and Applications; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies

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