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The Effect of Monetary Policy on Inflation in Ghana

Received: 28 August 2023     Accepted: 18 September 2023     Published: 27 September 2023
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Abstract

Ghana is working to reduce the inflation rate, which has become a burden. This study especially focuses on the short- and long-term effects of monetary policy on inflation in order to determine how it affects inflation in Ghana. The scope of the study was expanded to look at how responsive inflation is to monetary policy shocks and the relationship between monetary policy and Ghana's inflation rate. The vector error correction model was utilized as an estimation technique in the study, which utilised secondary data spanning the years 1990 to 2018. The study found that monetary policy, economic growth, and oil prices have a favorable short-term impact on inflation. The findings also showed that while currency rates and oil prices have a negative impact on inflation, monetary policy has a beneficial impact. The study also found a one-way causal relationship between inflation and monetary policy, exchange rate, economic expansion, and oil prices. The empirical results lead to the conclusion that inflationary innovations have a beneficial impact on monetary policy and the currency rate, but a negative one on oil prices. As a monetary policy tool to stop the inflationary trend, the report advises stakeholders and policymakers to reduce the quantity of money.

Published in International Journal of Finance and Banking Research (Volume 9, Issue 5)
DOI 10.11648/j.ijfbr.20230905.12
Page(s) 79-89
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2023. Published by Science Publishing Group

Keywords

Monetary Policy, Inflation Rate, Vector Error Correction Model, Causality, Impulse Response Function

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Cite This Article
  • APA Style

    Emmanuel Kwakye Amoah, Foster Awindolla Asaki, Dominic Atogumsekiya Anarigide, Michael Osei. (2023). The Effect of Monetary Policy on Inflation in Ghana. International Journal of Finance and Banking Research, 9(5), 79-89. https://doi.org/10.11648/j.ijfbr.20230905.12

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    ACS Style

    Emmanuel Kwakye Amoah; Foster Awindolla Asaki; Dominic Atogumsekiya Anarigide; Michael Osei. The Effect of Monetary Policy on Inflation in Ghana. Int. J. Finance Bank. Res. 2023, 9(5), 79-89. doi: 10.11648/j.ijfbr.20230905.12

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    AMA Style

    Emmanuel Kwakye Amoah, Foster Awindolla Asaki, Dominic Atogumsekiya Anarigide, Michael Osei. The Effect of Monetary Policy on Inflation in Ghana. Int J Finance Bank Res. 2023;9(5):79-89. doi: 10.11648/j.ijfbr.20230905.12

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  • @article{10.11648/j.ijfbr.20230905.12,
      author = {Emmanuel Kwakye Amoah and Foster Awindolla Asaki and Dominic Atogumsekiya Anarigide and Michael Osei},
      title = {The Effect of Monetary Policy on Inflation in Ghana},
      journal = {International Journal of Finance and Banking Research},
      volume = {9},
      number = {5},
      pages = {79-89},
      doi = {10.11648/j.ijfbr.20230905.12},
      url = {https://doi.org/10.11648/j.ijfbr.20230905.12},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20230905.12},
      abstract = {Ghana is working to reduce the inflation rate, which has become a burden. This study especially focuses on the short- and long-term effects of monetary policy on inflation in order to determine how it affects inflation in Ghana. The scope of the study was expanded to look at how responsive inflation is to monetary policy shocks and the relationship between monetary policy and Ghana's inflation rate. The vector error correction model was utilized as an estimation technique in the study, which utilised secondary data spanning the years 1990 to 2018. The study found that monetary policy, economic growth, and oil prices have a favorable short-term impact on inflation. The findings also showed that while currency rates and oil prices have a negative impact on inflation, monetary policy has a beneficial impact. The study also found a one-way causal relationship between inflation and monetary policy, exchange rate, economic expansion, and oil prices. The empirical results lead to the conclusion that inflationary innovations have a beneficial impact on monetary policy and the currency rate, but a negative one on oil prices. As a monetary policy tool to stop the inflationary trend, the report advises stakeholders and policymakers to reduce the quantity of money.},
     year = {2023}
    }
    

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    T1  - The Effect of Monetary Policy on Inflation in Ghana
    AU  - Emmanuel Kwakye Amoah
    AU  - Foster Awindolla Asaki
    AU  - Dominic Atogumsekiya Anarigide
    AU  - Michael Osei
    Y1  - 2023/09/27
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    N1  - https://doi.org/10.11648/j.ijfbr.20230905.12
    DO  - 10.11648/j.ijfbr.20230905.12
    T2  - International Journal of Finance and Banking Research
    JF  - International Journal of Finance and Banking Research
    JO  - International Journal of Finance and Banking Research
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    EP  - 89
    PB  - Science Publishing Group
    SN  - 2472-2278
    UR  - https://doi.org/10.11648/j.ijfbr.20230905.12
    AB  - Ghana is working to reduce the inflation rate, which has become a burden. This study especially focuses on the short- and long-term effects of monetary policy on inflation in order to determine how it affects inflation in Ghana. The scope of the study was expanded to look at how responsive inflation is to monetary policy shocks and the relationship between monetary policy and Ghana's inflation rate. The vector error correction model was utilized as an estimation technique in the study, which utilised secondary data spanning the years 1990 to 2018. The study found that monetary policy, economic growth, and oil prices have a favorable short-term impact on inflation. The findings also showed that while currency rates and oil prices have a negative impact on inflation, monetary policy has a beneficial impact. The study also found a one-way causal relationship between inflation and monetary policy, exchange rate, economic expansion, and oil prices. The empirical results lead to the conclusion that inflationary innovations have a beneficial impact on monetary policy and the currency rate, but a negative one on oil prices. As a monetary policy tool to stop the inflationary trend, the report advises stakeholders and policymakers to reduce the quantity of money.
    VL  - 9
    IS  - 5
    ER  - 

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Author Information
  • Department of Business Studies, Regentropfen College of Applied Sciences, Bolgatanga, Ghana

  • Department of Business Studies, Regentropfen College of Applied Sciences, Bolgatanga, Ghana

  • Department of Economics, SD Dombo University of Business and Integrated Development Studies, Wa, Ghana

  • Department of Business Studies, Regentropfen College of Applied Sciences, Bolgatanga, Ghana

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