## Does Money Matter for Inflation in Ghana?

_IMF Working Papers, November 1, 2011_

## Source details

**Canonical URL:** [Does Money Matter for Inflation in Ghana?](https://www.imf.org/en/publications/wp/issues/2016/12/31/does-money-matter-for-inflation-in-ghana-25377)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/31/does-money-matter-for-inflation-in-ghana-25377/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/31/does-money-matter-for-inflation-in-ghana-25377/index.json)
- [Bundle manifest](/en/publications/wp/issues/2016/12/31/does-money-matter-for-inflation-in-ghana-25377/bundle-manifest.json)

## Bibliographic details
- Authors: Arto Kovanen
- Published: November 1, 2011
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781463925291.001

---

### Summary
- Money has only limited information value for future inflation in Ghana over a typical monetary policy implementation horizon (four to eight quarters).
- Currency depreciation and demand pressures (as measured by the output gap) are important predictors of future price changes.
- Inflation inertia is high and inflation expectations are largely based on backward-looking information.
- Inflation expectations are not well anchored, suggesting more is needed to strengthen the credibility of Ghana's inflation-targeting regime.

### Key findings and evidence
- Limited predictive power of monetary aggregates for inflation at horizons of four to eight quarters.
- Strong predictive role for:
  - Currency depreciation.
  - Demand pressures as measured by the output gap.
- High inflation inertia and backward-looking inflation expectations indicate weak anchoring of expectations.

### Policy implications and recommendations
- Strengthen the credibility of Ghana's inflation-targeting regime to better anchor inflation expectations.
- Given the predictive importance of currency depreciation and the output gap, monetary policy frameworks should:
  - Monitor exchange rate developments closely.
  - Pay attention to demand conditions captured by the output gap when forecasting inflation and setting policy.

---

## Content in this bundle

- **Does Money Matter for Inflation in Ghana? — Section 1–3**
  - [Does Money Matter for Inflation in Ghana? — Section 1–3 (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2011/_wp11274.pdf.md){rel="alternate" type="text/markdown"}
  - [Does Money Matter for Inflation in Ghana? — Section 1–3 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2011/_wp11274.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/does-money-matter-for-inflation-in-ghana-25377_