Impacts of Monetary Policies on Inflation Rates in Sudan (1970-2014)

12 Pages Posted: 18 Mar 2015 Last revised: 29 Mar 2020

See all articles by Abdel Ibnouf

Abdel Ibnouf

Al-Neelain University - Department of Economics

Issam A.W. Mohamed

Al-Neelain University - Department of Economics

Date Written: March 17, 2015

Abstract

The current paper investigates the role of fiscal and monetary policies on inflation in Sudan for the period (1970-2014). The study assessed the impact of money supply, exchange rate, gross domestic product (GDP), budget deficit and government expenditure on inflation. It has adopted a descriptive and analytical method to achieve the goal. In particular, it has relied on empirical investigation based on descriptive statistic and econometric modeling.

The results shows that several monetary, fiscal and structural factors, namely, money supply, budget deficit and shrinking of gross domestic product are simultaneously influencing inflation in Sudan. While exchange rate and government expenditure are found to be with no effect on inflation rate, these findings may explain the fact that inflation depends on the way government expenditure is financed rather than the magnitude of the expenditure itself.

The study recommends that the government should depend on real sources in financing budget deficit rather than monetizing deficit by and borrowing from the central Bank and which have significant impact on increasing money supply. It has to ensure effective role in financing budget deficit and controlling inflation. Moreover, it is important to prepare an appropriate environment for investment and best utilization of Sudan’s national resources that stimulate gross domestic product (GDP) and reduce inflation rates.

Keywords: Monetary Policies, Budget Deficit, Inflation

JEL Classification: E40, E42, H61, H62, P24

Suggested Citation

Ibnouf, Abdel and Mohamed, Issam A.W., Impacts of Monetary Policies on Inflation Rates in Sudan (1970-2014) (March 17, 2015). Available at SSRN: https://ssrn.com/abstract=2579755 or http://dx.doi.org/10.2139/ssrn.2579755

Abdel Ibnouf

Al-Neelain University - Department of Economics

P.O. Box 12910-11111
Khartoum, 11111
Sudan

Issam A.W. Mohamed (Contact Author)

Al-Neelain University - Department of Economics ( email )

P.O. Box 12910-11111
Khartoum, Khartoum 11111
Sudan
249122548254 (Phone)

HOME PAGE: http://works.bepress.com/issamawmohamed/

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