Theoretically proposed policy instrument to address the negative effect of inflation inflow into positive macroeconomic growth: the case study of the Sierra Leone economy

Tweneboah Senzu, Emmanuel (2021): Theoretically proposed policy instrument to address the negative effect of inflation inflow into positive macroeconomic growth: the case study of the Sierra Leone economy. Published in: Social Science Research Network , Vol. X2, No. Summer, 2 (7) (1 April 2020): pp. 1-25.

Abstract

The paper empirically examines the predictive factor of the inflation rate observed to be the vector force of macroeconomic management as in the rise and fall of the currency exchange value of 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 transaction beneficial for sustainable macroeconomic growth. This leads to established findings, that an average price shift of +/- 0.032 of the Leone currency price with the US dollar at the open market, always causes 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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