Inflation and interest rate dynamics in Ghana: the supply-side perspective

IF 1.4 Q3 ECONOMICS
Solomon Yemidi, Grace Nkansa Asante, Paul Owusu Takyi
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Abstract

PurposeThe purpose of this research is to examine the impact of alterations in the path of monetary policy rates on inflation via the supply side of an emerging economy.Design/methodology/approachThe study employed semi-annual data covering the period 2007S1 to 2020S2 on the inflation rate, the combined outputs of industry and agriculture, the lending rate, and the monetary policy rate. The vector autoregression model was estimated and counterfactual simulation exercises were conducted.FindingsThe study revealed that a move from a higher to a lower monetary policy rate regime resulted in a shift in inflation from a higher to a lower regime. In particular, a 200-basis point reduction in the monetary policy rate over the simulation horizon produces a 1.3% fall in the inflation rate over the same period.Research limitations/implicationsThe study has a limitation due to the unavailability of a long-span dataset on all relevant variables. As a result, it is important to exercise caution when interpreting the study's findings. A potential area for further research is to explore how changes in interest rates impact inflation in the real economy by utilising other multiple-variable time series techniques.Practical implicationsIt is the opinion of the authors that for inflation in Ghana to move to a lower regime, conscious efforts should be made by the monetary authorities to gradually move from a regime of a high monetary policy rate to a lower one.Social implicationsIn particular, a 200-basis point reduction in the MPR over the simulation horizon produces a 1.3% fall in the inflation rate over the same period.Originality/valueThis study enhances the authors' knowledge of how monetary policy can affect inflation in developing countries through the supply-side channel.
加纳的通货膨胀和利率动态:供给侧视角
目的本研究的目的是通过新兴经济体的供给侧来检验货币政策利率路径的改变对通货膨胀的影响。设计/方法/方法该研究采用了涵盖2007S1至2020S2期间的通货膨胀率、工农业综合产出、贷款利率和货币政策利率的半年期数据。对向量自回归模型进行了估计,并进行了反事实模拟练习。研究结果表明,从较高货币政策利率体制向较低货币政策利率机制的转变导致通货膨胀率从较高制度向较低制度的转变。特别是,在模拟范围内,货币政策利率降低200个基点会使同期通胀率下降1.3%。研究局限性/含义由于无法获得所有相关变量的大跨度数据集,该研究存在局限性。因此,在解释研究结果时,谨慎行事是很重要的。进一步研究的一个潜在领域是通过利用其他多变量时间序列技术,探索利率变化如何影响实体经济中的通货膨胀。实际含义作者认为,为了使加纳的通货膨胀率下降,货币当局应该有意识地努力从高货币政策利率逐步下降。社会影响特别是,在模拟范围内,MPR降低200个基点会导致同期通货膨胀率下降1.3%。原创性/价值这项研究增强了作者对货币政策如何通过供给侧渠道影响发展中国家通货膨胀的认识。
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来源期刊
CiteScore
3.20
自引率
7.70%
发文量
41
期刊介绍: African Journal of Economic and Management Studies (AJEMS) advances both theoretical and empirical research, informs policies and practices, and improves understanding of how economic and business decisions shape the lives of Africans. AJEMS is a multidisciplinary journal and welcomes papers from all the major disciplines in economics, business and management studies.
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