Does Money Matter for Inflation in Ghana?
November 1, 2011
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Summary
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.1
Subject: Demand for money, Inflation, Inflation targeting, Monetary base, Monetary policy, Money, Output gap, Prices, Production
Keywords: Africa, Demand for money, gap indicator, Inflation, inflation expectation, inflation objective, Inflation targeting, inflation-targeting, inflation-targeting arrangement, Monetary base, monetary policy, monetary policy credibility, monetary policy implementation, money demand, Output gap, reaction function, WP
Pages:
23
Volume:
2011
DOI:
Issue:
274
Series:
Working Paper No. 2011/274
Stock No:
WPIEA2011274
ISBN:
9781463925291
ISSN:
1018-5941
