Does Money Matter for Inflation in Ghana?
24 Pages Posted: 20 Dec 2011
Date Written: November 2011
Money has only limited information value for future inflation in Ghana over a typical monetary policy implementation horizon (four to eight quarters). On the other hand, currency depreciation and demand pressures (as measured by the output gap) are shown to be important predictors of future price changes. Inflation inertia is high and inflation expectations are largely based on backward-looking information, suggesting that inflation expectations are not well anchored and hence more is needed to strengthen the credibility of Ghana’s inflation-targeting regime.
Keywords: Capital markets, Cross country analysis, Demand for money, Economic models, Emerging markets, Inflation targeting, Interest rates, Monetary policy
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