The Effect of Price Stability on Real Sector Performance in Ghana
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Date
2011-01
Authors
Quartey, Peter
Journal Title
Journal ISSN
Volume Title
Publisher
AERC
Abstract
Monetary policy in Ghana has, over the years, focused on ensuring price stability or low
inflation. The aim of the price stability policy is to provide a stable environment for real
sector activities to flourish. However, the outcome of the policy on real sector activities
has not been subjected to any empirical investigation and this forms the focus of this
study. The study, specifically, examines how the policy of price stability, pursued by the
Bank of Ghana, has affected real sector performance. It also examines the revenue and
"growth maximizing" rate of inflation for Ghana using data from Bank of Ghana as well
as from World Development Indicators (WDI). Subsequently, the relationship between
inflation thresholds and real sector performance is examined. This is complemented
with bimonthly data to discuss the trends in business confidence during the recent price
stability regime. The study finds that economic performance is higher under low inflation
periods than when inflation is high. It also establishes the existence of threshold effects
of inflation on economic growth.
Description
HB 236. G4 Q 37 2011
Keywords
Price Regulations - Ghana , GHana - Economic conditions , Economic History