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A Modelling of Ghana's Inflation Experience: 1960–2003

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  • Mathew Kofi Ocran

Abstract

The study sought to ascertain the key determinants of inflation in Ghana for the past 40 years. Stylized facts about Ghana’s inflation experience indicate that since the country’s exit from the West African Currency Board soon after independence, inflation management has been ineffective despite two decades of vigorous reforms. Using the Johansen cointegration test and an error correction model, the paper identified inflation inertia, changes in money and changes in Government of Ghana treasury bill rates, as well as changes in the exchange rate, as determinants of inflation in the short run. Of these, inflation inertia is the dominant determinant of inflation in Ghana. It is therefore suggested that to make treasury bill rates more effective as a nominal anchor, inflationary expectations ought to be reduced considerably.

Suggested Citation

  • Mathew Kofi Ocran, 2007. "A Modelling of Ghana's Inflation Experience: 1960–2003," Research Papers RP_169 Key words: Ghana, , African Economic Research Consortium.
  • Handle: RePEc:aer:rpaper:rp_169
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    File URL: http://www.aercafrica.org/documents/RP169.pdf
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    Cited by:

    1. Patrick Enu & Emmanuel Dodzi K. Havi, 2014. "Macroeconomic Determinants of Inflation In Ghana: A Co integration Approach," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(7), pages 95-110, July.
    2. Deraniyagala, Sonali & Kaluwa, Ben, 2011. "Macroeconomic policy for employment creation: The case of Malawi," MPRA Paper 52715, University Library of Munich, Germany.
    3. Makochekanwa, Albert, 2010. "Estimating the size and trends of the second economy in Zimbabwe," MPRA Paper 37807, University Library of Munich, Germany.
    4. Cuma BOZKURT, 2014. "Money, Inflation and Growth Relationship: The Turkish Case," International Journal of Economics and Financial Issues, Econjournals, vol. 4(2), pages 309-322.

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