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A Causal Relationship between Corporate Investment and Inflation: empirical investigation from WAMZ economy

Author

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  • Rahman Olanrewaju Raji

Abstract

The paper examines causal relationship between corporate investment and inflation for four countries in West African Monetary Zone, using the Vector Error Correction model (VECM). The study discovered that there is co-integration between investment and inflation in the selected countries in WAMZ. This implies that a long run relationship between inflation and investment in the selected WAMZ nations. The results show that investment Granger causes inflation in Gambia, Ghana and Nigeria while inflation Granger causes investment in Sierra Leone but bi-directional relationship inflation and investment was not found in WAMZ. However, the results show that there are needs to ensure reforms and policies that should be adopted and must become the utmost priority in the WAMZ economies for the monetary policy to be effective in influencing economic activities which in turn enhances investment in the zone.

Suggested Citation

  • Rahman Olanrewaju Raji, 2015. "A Causal Relationship between Corporate Investment and Inflation: empirical investigation from WAMZ economy," Journal of Global Economy, Research Centre for Social Sciences,Mumbai, India, vol. 11(3), pages 199-211, September.
    • Handle: RePEc:jge:journl:1133
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    More about this item

    Keywords

    corporate investment; inflation; WAMZ;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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