<abstract xmlns="http://www.w3.org/1999/xhtml">

<sec><h3>Research background</h3>
<p>Ghana was the second African country to adopt the inflation-targeting framework in 2007. The country faced persistently high levels of inflation, exceeding 100 percent in the early 1980s. Since the adoption of the inflation targeting regime, the inflation rate has decreased and remains below 20 percent.</p>
</sec>
<sec><h3>Purpose</h3>
<p>Given the importance of the policy mix in achieving price stability and economic growth in any economy, this study examines which policy mix is more effective in determining the inflation dynamics in Ghana.</p>
</sec>
<sec><h3>Research methodology</h3>
<p>Annual data from 1980 to 2021 and the autoregressive distributed lag (ARDL) were used, firstly on individual monetary and fiscal policy models and then jointly on the policy mix model.</p>
</sec>
<sec><h3>Results</h3>
<p>Results show that fiscal policy is effective and significant in determining inflation dynamics in Ghana in the long run, while monetary policy is ineffective, less dominant, and statistically insignificant. Monetary policy is effective and significant in the short run. Based on the findings of the study, policy recommendations include giving more attention to the possible coordination of fiscal and monetary policies than has been previously given.</p>
</sec>
<sec><h3>Novelty</h3>
<p>The study’s originality is in examining if the monetary or fiscal policy (policy mix) effectively regulates the inflation rate in Ghana; the inflation target and the exchange rate as external shocks were included, amongst others and estimating the separate and combined models for the policy mix.</p>
</sec>
</abstract>

Research background
Ghana was the second African country to adopt the inflation-targeting framework in 2007. The country faced persistently high levels of inflation, exceeding 100 percent in the early 1980s. Since the adoption of the inflation targeting regime, the inflation rate has decreased and remains below 20 percent.

Purpose
Given the importance of the policy mix in achieving price stability and economic growth in any economy, this study examines which policy mix is more effective in determining the inflation dynamics in Ghana.

Research methodology
Annual data from 1980 to 2021 and the autoregressive distributed lag (ARDL) were used, firstly on individual monetary and fiscal policy models and then jointly on the policy mix model.

Results
Results show that fiscal policy is effective and significant in determining inflation dynamics in Ghana in the long run, while monetary policy is ineffective, less dominant, and statistically insignificant. Monetary policy is effective and significant in the short run. Based on the findings of the study, policy recommendations include giving more attention to the possible coordination of fiscal and monetary policies than has been previously given.

Novelty
The study’s originality is in examining if the monetary or fiscal policy (policy mix) effectively regulates the inflation rate in Ghana; the inflation target and the exchange rate as external shocks were included, amongst others and estimating the separate and combined models for the policy mix.

Inflation Dynamics and Policy Mix in Ghana

Folia Oeconomica Stetinensia

This work is licensed under the Creative Commons Attribution-ShareAlike 4.0 International License.

{"article-title":"Inflation Dynamics and Policy Mix in Ghana"}

Research background
Ghana was the second African country to adopt the inflation-targeting framework in 2007. The country faced persistently high levels of...

Inflation Dynamics and Policy Mix in Ghana

Published Online: May 31, 2024

Page range: 124 - 143

Received: Apr 04, 2023

Accepted: Feb 21, 2024

DOI: https://doi.org/10.2478/foli-2024-0008

Keywords
ARDL, monetary policy, fiscal policy, inflation, Ghana

© 2024 Temitope Lydia A. Leshoro, published by Sciendo

This work is licensed under the Creative Commons Attribution-ShareAlike 4.0 International License.

Inflation Dynamics and Policy Mix in Ghana

Published Online: May 31, 2024

Page range: 124 - 143

Received: Apr 04, 2023

Accepted: Feb 21, 2024

DOI: https://doi.org/10.2478/foli-2024-0008

KeywordsARDL, monetary policy, fiscal policy, inflation, Ghana

© 2024 Temitope Lydia A. Leshoro, published by Sciendo

This work is licensed under the Creative Commons Attribution-ShareAlike 4.0 International License.

Keywords
ARDL, monetary policy, fiscal policy, inflation, Ghana