The Impact of Money Supply on Inflation Rate in Ghana

Sampson Vivian Esumanba, Nantogmah Danaa, Nyaku Efia Akyaa Konadu


The main purpose of the study was to empirically investigate the impact of money supply on inflation rate in Ghana using semi-annual series ranging from December 1990 to June 2017. Specifically, the Autoregressive Distributed Lag (ARDL) approach to cointegration was employed to ascertain the long-run and short-run relationship between the series. The findings from the study revealed that, growth in money supply (GMS) has a positive significant impact on inflation rate (INFR) in the long-run. However, no significant association was found between money supply and inflation in the short-run. Political instability during election year that arises from the manipulation of fiscal policy in order for the incumbent government to increase the likelihood of winning the next election was found to have a negative and significant impact on inflation rate in the short run.

Keywords: Money Supply, Inflation, government spending, Ghana

DOI: 10.7176/RJFA/10-16-17

Publication date: August 31st 2019

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