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A Study on Determinants of Inflation in Rwanda from 1970-2013

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  • Ruzima, Martin
  • Veerachamy, P

Abstract

Keeping low inflation rate is regarded as a measure of macroeconomic stability, to deal with it; determinants of inflation have to be well managed. This paper investigates the influence of government spending, import of goods and services, population growth, agriculture output and foreign direct investment on inflation. Time series data for the period of 1970-2013 have been used. The ordinary least squares (OLS) method was employed to estimate the regression model. We find that agriculture output and import of goods and services are the main drivers of inflation in Rwanda. Population growth is statistically significant and negatively correlated with inflation. Therefore, government spending and foreign direct investment have an insignificant negative and positive impact on inflation respectively. Policy implications of the findings have been discussed.

Suggested Citation

  • Ruzima, Martin & Veerachamy, P, 2015. "A Study on Determinants of Inflation in Rwanda from 1970-2013," MPRA Paper 73222, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:73222
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    References listed on IDEAS

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    1. World Bank, 2015. "World Development Indicators 2015," World Bank Publications - Books, The World Bank Group, number 21634, December.
    2. 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.
    3. Ms. Laura Papi & Ms. G. C. Lim, 1997. "An Econometric Analysis of the Determinants of Inflation in Turkey," IMF Working Papers 1997/170, International Monetary Fund.
    4. Khan, Abdul Aleem & Ahmed, Qazi Masood & Hyder, Kalim, 2007. "Determinants oF Recent Inflation in Pakistan," MPRA Paper 16254, University Library of Munich, Germany, revised 2007.
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    Cited by:

    1. Suwareh Darbo & Amandine Nakumuryango, 2018. "Working Paper 305 - Inflation Dynamics In Post-Secession Sudan," Working Paper Series 2432, African Development Bank.
    2. Samuel Tolasa & Sisay Tolla Whakeshum & Negese Tamirat Mulatu, 2022. "Macroeconomic Determinants of Inflation in Ethiopia: ARDL Approach to Cointegration," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 8(1), pages 96-120.

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    More about this item

    Keywords

    Inflation; Foreign Direct Investment; Agriculture; Rwanda; OLS;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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