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Causal linkages among money growth, inflation and interest rates in Ghana

Journal of Economics Bibliography

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Title Causal linkages among money growth, inflation and interest rates in Ghana
 
Creator AMANKWAH, Ernest
PRINCE, Atta Sarfo; Department of Economics, Kwame Nkrumah University of Science and Technology, Ghana
NUBUOR, Alice
 
Subject Money growth; Inflation; Interest rate.
B26; D53; E44; G10; G34.
 
Description Abstract. This study instigates the causal linkages among money growth, inflation and interest rate in Ghana. The essence of ensuring price stability, a considerable increase in money growth that enhances economic growth and development and favorable rate of interest that encourage domestic business and foreign direct investment cannot be over emphasized. The data was extracted from two main sources. The main variable under study were money supply, interest rate and inflation rate. Other variables that affect inflation rate such as exchange rate, real gross domestic product were controlled for. Data on money supply, interest rate and exchange rate were extracted from world development indicator (WDI) whereas data on inflation and the GDP growth were extracted from annual report of the Central Bank. The data comprises of missed order of cointegration. That is I (0) and I(1). So bounds test of cointegration proposed by Pesaran, Shin & Smith (2001) was used. It was found out that money growth has both short run and long run relationship with inflation and all the other variables are insignificant in influencing inflation. The Granger causality test was conducted to help find the causality among the variables of interest. The null hypothesis that inflation rate does not does not Granger cause money growth was rejected at 5% which implies that there is a uni-directional causality between inflation and money growth. It was recommended that, in an attempt of reducing inflation both in the long run and short run, increase in money supply should be reasonable.Keywords. Money growth, Inflation, Interest rate.JEL. B26, D53, E44, G10, G34.
 
Publisher Journal of Economics Bibliography
 
Contributor —
 
Date 2019-12-30
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.kspjournals.org/index.php/JEB/article/view/1982
10.1453/jeb.v6i4.1982
 
Source Journal of Economics Bibliography; Vol 6, No 4 (2019): December; 309-339
2149-2387
 
Language eng
 
Relation http://www.kspjournals.org/index.php/JEB/article/view/1982/2018
 
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