The Effect of Monetary Policy on Price Stability and Gross Domestic Product in Ghana: A Predictive Analytic Approach

The Effect of Monetary Policy on Price Stability and Gross Domestic Product in Ghana: A Predictive Analytic Approach

Yaw Bediako, Patrick Ohemeng Gyaase, Frank Gyimah Sackey

This study examined the effects of monetary policy on price stability and gross domestic product (GDP) in Ghana using a predictive data analytical model adapted from Friedman's (1982) models. Monetary policy adopted a two-target framework based on both the policy interest rate target and the bank credit aggregate target. Hypotheses tests were conducted using Vector Auto-Regressions (VARs) and Multiple Regression Analyses using secondary data. The VAR tests produced a statistically weak relationship between both price stability and real GDP and the two-target monetary policy framework. The results from the multiple regression analyses, however, indicated statistically significant relationships between the price stability and interest rate targets and those of real GDP and bank credit aggregate targets, thus confirming the model’s predictive capability. The study therefore recommends that for the …

IGI Global

2022

https://scholar.google.com/citations?view_op=view_citation&hl=en&user=dzxWX-AAAAAJ&cstart=20&pagesize=80&citation_for_view=dzxWX-AAAAAJ:HDshCWvjkbEC

English