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Effect of Monetary Policy on Economic Growth in Ghana

Author

Listed:
  • Abille, Adamu Braimah

    (Department of Economics, Eskisehir Osmangazi University, Turkey)

  • Mpuure, Desmond Mbe-Nyire

    (Department of Economics, Kwame Nkrumah University of Science and Technology, Ghana)

Abstract

This paper seeks to examine the role of monetary policy as an instrument for growth in the Ghanaian economy. The study was conducted based on yearly data from 1983to 2017.Economic growth was the regressand in the study,with money supply, inflation,and the lending rate as the regressors. The ARDL bounds test technique was employed to investigate cointegration among the variables. The results confirmed the presence of cointegration among the variables. The results also showed the money supply as having a significant positive effect on growth in Ghana in the long run but a significant negative effect on growth in the short run. The lending rate however, was found to haveaninsignificant negative effect on growth in the long run but a significant positive effect on growth in the short run. Therefore, on the basis of the research findings, it is recommended that money supply be regulated in such a way that it does not lead to uncontrollable inflation, as inflation has a significant negative impact on economicgrowth at least in the short run,while persistent inflation in the long run is inimical to economic growth. It is further recommended that the lending rate be managed properly in order forinvestment tobe accelerated to boost economic growth.

Suggested Citation

  • Abille, Adamu Braimah & Mpuure, Desmond Mbe-Nyire, 2020. "Effect of Monetary Policy on Economic Growth in Ghana," Asian Journal of Applied Economics/ Applied Economics Journal, Kasetsart University, Faculty of Economics, Center for Applied Economic Research, vol. 27(2), pages 110-124, December.
    • Handle: RePEc:ris:apecjn:0047
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    Citations

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    Cited by:

    1. Bosede Olanike Awoyemi & Mark Achukwu & Simon Asala & Oluwole Aiyegbusi & Tajudeen Abiodun Onikate-Amosu, 2024. "Building Resilience for Transformational Recovery: An Analysis of Monetary Policy and Economic Growth in West Africa before and Following the COVID-19 Periods," International Journal of Economics and Financial Issues, Econjournals, vol. 14(4), pages 111-122, July.
    2. Kingsley Imandojemu & Bosede Ngozi Adeleye & Babatunde Aina, 2023. "Monetary Policy And Economic Growth In Nigeria: Evidence From Bounds And Bayer-Hanck Cointegration Techniques," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 68(236), pages 81-103, January –.

    More about this item

    Keywords

    monetary policy; real GDP growth; ARDL; cointegration;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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