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DETERMINANTS OF INFLATION IN GHANA: AN EMPIRICAL INVESTIGATION
Author(s) -
ADU GEORGE,
MARBUAH GEORGE
Publication year - 2011
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/j.1813-6982.2011.01273.x
Subject(s) - economics , inflation (cosmology) , exchange rate , real interest rate , money supply , macroeconomics , monetary policy , monetary economics , supply side , inflation targeting , interest rate , econometric model , inflation rate , nominal interest rate , econometrics , physics , theoretical physics
This paper provides an empirical analysis of the factors accounting for inflation dynamics in Ghana using the bounds test and other econometric approaches. We find that real output, nominal exchange rate, broad money supply, nominal interest rate and fiscal deficit play a dominant role in the inflationary process in Ghana. To the extent that output growth by far has the strongest impact on inflation, targeting supply‐side constraints will help moderate price inflation. The paper concludes that inflation in Ghana is explained by a combination of structural and monetary factors consistent with prior studies.