Examining the Factors Underlining the Inflationary Phenomenon in Ghana – A Dynamic ARDL Analysis

Emmanuel Atta Anaman

doi:doi:10.11648/j.jbed.20190402.13

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Examining the Factors Underlining the Inflationary Phenomenon in Ghana – A Dynamic ARDL Analysis

Emmanuel Atta Anaman

Published in Journal of Business and Economic Development (Volume 4, Issue 2)

Received: 15 May 2019 Accepted: 23 June 2019 Published: 1 July 2019

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Abstract

The phenomenon of inflation is one of the most widely discussed economic issues across the world and for this reason has continued to remain very relevant and visible within the policy domain. This is because it affects the economic fortunes of the principal actors within the economy from the low to the high income. This study adds to the existing literature on inflation by identifying the short and long run factors which influence its trajectory in the Ghanaian economy. The study adopts the Autoregressive Distributed Lag approach to comprehensively establish the long and short run determinants of inflation based on the data set spanning from 1979 to 2016 and the empirical analysis shows that price level is in the long run significantly determined by food crop production, crude oil prices, population, output of goods and services and money supply but in the short run the only variable which does not impact significantly on the price level variable is the interest rate proxied by the policy rate. It is also established that the system is able to correct about 60% of the deviations from its equilibrium position in every quarter. The main recommendation that emanates from the study is that policy makers instead of dealing with inflation mainly from the orthodox monetary perspective must also begin to pay more attention to the supply side issues in the economy.

Published in	Journal of Business and Economic Development (Volume 4, Issue 2)
DOI	10.11648/j.jbed.20190402.13
Page(s)	53-63
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2019. Published by Science Publishing Group

Keywords

Bounds Test, Co Integration, Error Correction, Inflation and Stationarity

References

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APA Style

Emmanuel Atta Anaman. (2019). Examining the Factors Underlining the Inflationary Phenomenon in Ghana – A Dynamic ARDL Analysis. Journal of Business and Economic Development, 4(2), 53-63. https://doi.org/10.11648/j.jbed.20190402.13

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ACS Style

Emmanuel Atta Anaman. Examining the Factors Underlining the Inflationary Phenomenon in Ghana – A Dynamic ARDL Analysis. J. Bus. Econ. Dev. 2019, 4(2), 53-63. doi: 10.11648/j.jbed.20190402.13

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AMA Style

Emmanuel Atta Anaman. Examining the Factors Underlining the Inflationary Phenomenon in Ghana – A Dynamic ARDL Analysis. J Bus Econ Dev. 2019;4(2):53-63. doi: 10.11648/j.jbed.20190402.13

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@article{10.11648/j.jbed.20190402.13,
  author = {Emmanuel Atta Anaman},
  title = {Examining the Factors Underlining the Inflationary Phenomenon in Ghana – A Dynamic ARDL Analysis},
  journal = {Journal of Business and Economic Development},
  volume = {4},
  number = {2},
  pages = {53-63},
  doi = {10.11648/j.jbed.20190402.13},
  url = {https://doi.org/10.11648/j.jbed.20190402.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jbed.20190402.13},
  abstract = {The phenomenon of inflation is one of the most widely discussed economic issues across the world and for this reason has continued to remain very relevant and visible within the policy domain. This is because it affects the economic fortunes of the principal actors within the economy from the low to the high income. This study adds to the existing literature on inflation by identifying the short and long run factors which influence its trajectory in the Ghanaian economy. The study adopts the Autoregressive Distributed Lag approach to comprehensively establish the long and short run determinants of inflation based on the data set spanning from 1979 to 2016 and the empirical analysis shows that price level is in the long run significantly determined by food crop production, crude oil prices, population, output of goods and services and money supply but in the short run the only variable which does not impact significantly on the price level variable is the interest rate proxied by the  policy rate. It is also established that the system is able to correct about 60% of the deviations from its equilibrium position in every quarter. The main recommendation that emanates from the study is that policy makers instead of dealing with inflation mainly from the orthodox monetary perspective must also begin to pay more attention to the supply side issues in the economy.},
 year = {2019}
}

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TY  - JOUR
T1  - Examining the Factors Underlining the Inflationary Phenomenon in Ghana – A Dynamic ARDL Analysis
AU  - Emmanuel Atta Anaman
Y1  - 2019/07/01
PY  - 2019
N1  - https://doi.org/10.11648/j.jbed.20190402.13
DO  - 10.11648/j.jbed.20190402.13
T2  - Journal of Business and Economic Development
JF  - Journal of Business and Economic Development
JO  - Journal of Business and Economic Development
SP  - 53
EP  - 63
PB  - Science Publishing Group
SN  - 2637-3874
UR  - https://doi.org/10.11648/j.jbed.20190402.13
AB  - The phenomenon of inflation is one of the most widely discussed economic issues across the world and for this reason has continued to remain very relevant and visible within the policy domain. This is because it affects the economic fortunes of the principal actors within the economy from the low to the high income. This study adds to the existing literature on inflation by identifying the short and long run factors which influence its trajectory in the Ghanaian economy. The study adopts the Autoregressive Distributed Lag approach to comprehensively establish the long and short run determinants of inflation based on the data set spanning from 1979 to 2016 and the empirical analysis shows that price level is in the long run significantly determined by food crop production, crude oil prices, population, output of goods and services and money supply but in the short run the only variable which does not impact significantly on the price level variable is the interest rate proxied by the  policy rate. It is also established that the system is able to correct about 60% of the deviations from its equilibrium position in every quarter. The main recommendation that emanates from the study is that policy makers instead of dealing with inflation mainly from the orthodox monetary perspective must also begin to pay more attention to the supply side issues in the economy.
VL  - 4
IS  - 2
ER  -

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Author Information

Emmanuel Atta Anaman

Department of Banking and Finance, School of Business, University of Education, Winneba, Ghana

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APA Style

Emmanuel Atta Anaman. (2019). Examining the Factors Underlining the Inflationary Phenomenon in Ghana – A Dynamic ARDL Analysis. Journal of Business and Economic Development, 4(2), 53-63. https://doi.org/10.11648/j.jbed.20190402.13

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ACS Style

Emmanuel Atta Anaman. Examining the Factors Underlining the Inflationary Phenomenon in Ghana – A Dynamic ARDL Analysis. J. Bus. Econ. Dev. 2019, 4(2), 53-63. doi: 10.11648/j.jbed.20190402.13

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AMA Style

Emmanuel Atta Anaman. Examining the Factors Underlining the Inflationary Phenomenon in Ghana – A Dynamic ARDL Analysis. J Bus Econ Dev. 2019;4(2):53-63. doi: 10.11648/j.jbed.20190402.13

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@article{10.11648/j.jbed.20190402.13,
  author = {Emmanuel Atta Anaman},
  title = {Examining the Factors Underlining the Inflationary Phenomenon in Ghana – A Dynamic ARDL Analysis},
  journal = {Journal of Business and Economic Development},
  volume = {4},
  number = {2},
  pages = {53-63},
  doi = {10.11648/j.jbed.20190402.13},
  url = {https://doi.org/10.11648/j.jbed.20190402.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jbed.20190402.13},
  abstract = {The phenomenon of inflation is one of the most widely discussed economic issues across the world and for this reason has continued to remain very relevant and visible within the policy domain. This is because it affects the economic fortunes of the principal actors within the economy from the low to the high income. This study adds to the existing literature on inflation by identifying the short and long run factors which influence its trajectory in the Ghanaian economy. The study adopts the Autoregressive Distributed Lag approach to comprehensively establish the long and short run determinants of inflation based on the data set spanning from 1979 to 2016 and the empirical analysis shows that price level is in the long run significantly determined by food crop production, crude oil prices, population, output of goods and services and money supply but in the short run the only variable which does not impact significantly on the price level variable is the interest rate proxied by the  policy rate. It is also established that the system is able to correct about 60% of the deviations from its equilibrium position in every quarter. The main recommendation that emanates from the study is that policy makers instead of dealing with inflation mainly from the orthodox monetary perspective must also begin to pay more attention to the supply side issues in the economy.},
 year = {2019}
}

Copy | Download

TY  - JOUR
T1  - Examining the Factors Underlining the Inflationary Phenomenon in Ghana – A Dynamic ARDL Analysis
AU  - Emmanuel Atta Anaman
Y1  - 2019/07/01
PY  - 2019
N1  - https://doi.org/10.11648/j.jbed.20190402.13
DO  - 10.11648/j.jbed.20190402.13
T2  - Journal of Business and Economic Development
JF  - Journal of Business and Economic Development
JO  - Journal of Business and Economic Development
SP  - 53
EP  - 63
PB  - Science Publishing Group
SN  - 2637-3874
UR  - https://doi.org/10.11648/j.jbed.20190402.13
AB  - The phenomenon of inflation is one of the most widely discussed economic issues across the world and for this reason has continued to remain very relevant and visible within the policy domain. This is because it affects the economic fortunes of the principal actors within the economy from the low to the high income. This study adds to the existing literature on inflation by identifying the short and long run factors which influence its trajectory in the Ghanaian economy. The study adopts the Autoregressive Distributed Lag approach to comprehensively establish the long and short run determinants of inflation based on the data set spanning from 1979 to 2016 and the empirical analysis shows that price level is in the long run significantly determined by food crop production, crude oil prices, population, output of goods and services and money supply but in the short run the only variable which does not impact significantly on the price level variable is the interest rate proxied by the  policy rate. It is also established that the system is able to correct about 60% of the deviations from its equilibrium position in every quarter. The main recommendation that emanates from the study is that policy makers instead of dealing with inflation mainly from the orthodox monetary perspective must also begin to pay more attention to the supply side issues in the economy.
VL  - 4
IS  - 2
ER  -

Copy | Download