Volume 4, Issue 2, June 2019, Page: 53-63
Examining the Factors Underlining the Inflationary Phenomenon in Ghana – A Dynamic ARDL Analysis
Emmanuel Atta Anaman, Department of Banking and Finance, School of Business, University of Education, Winneba, Ghana
Received: May 15, 2019;       Accepted: Jun. 23, 2019;       Published: Jul. 1, 2019
DOI: 10.11648/j.jbed.20190402.13      View  27      Downloads  10
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.
Keywords
Bounds Test, Co Integration, Error Correction, Inflation and Stationarity
To cite this article
Emmanuel Atta Anaman, Examining the Factors Underlining the Inflationary Phenomenon in Ghana – A Dynamic ARDL Analysis, Journal of Business and Economic Development. Vol. 4, No. 2, 2019, pp. 53-63. doi: 10.11648/j.jbed.20190402.13
Copyright
Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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