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Theoretically proposed policy instrument to address the negative effect of inflation inflow into positive macroeconomic growth: the case study of the Sierra Leone economy

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  • Tweneboah Senzu, Emmanuel

Abstract

The paper empirically examines the predictive factor of the inflation rate observed to be the vector force of macroeconomic management as in the rise and fall of the currency exchange value of the Sierra Leone economy. Thereby adopting a statistical tool of an exogenous univariate auto-regression integrated moving average, to build a forecasting model between the open-market-exchange rate and the inflation rate to establish the degree of correlation effect, as a basis to theoretically prescribe a policy instrument, a means to maximize economic transaction beneficial for sustainable macroeconomic growth. This leads to established findings, that an average price shift of +/- 0.032 of the Leone currency price with the US dollar at the open market, always causes a percentage point change of inflation to the endogenous economy, when all other factors remain constant.

Suggested Citation

  • Tweneboah Senzu, Emmanuel, 2021. "Theoretically proposed policy instrument to address the negative effect of inflation inflow into positive macroeconomic growth: the case study of the Sierra Leone economy," MPRA Paper 110047, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:110047
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    File URL: https://mpra.ub.uni-muenchen.de/113361/1/MPRA_paper_113361.pdf
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    References listed on IDEAS

    as
    1. Levine, Ross & Zervos, Sara J, 1993. "What We Have Learned about Policy and Growth from Cross-Country Regressions?," American Economic Review, American Economic Association, vol. 83(2), pages 426-430, May.
    2. Bruno, Michael & Easterly, William, 1998. "Inflation crises and long-run growth," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 3-26, February.
    3. Mr. Kadima D. Kalonji & Jan Gottschalk & Mr. Ken Miyajima, 2008. "Analyzing Determinants of Inflation When There Are Data Limitation: The Case of Sierra Leone," IMF Working Papers 2008/271, International Monetary Fund.
    4. U. Tun Wai, 1959. "The Relation between Inflation and Economic Development: A Statistical Inductive Study," IMF Staff Papers, Palgrave Macmillan, vol. 7(2), pages 302-317, October.
    5. Fischer, Stanley, 1993. "The role of macroeconomic factors in growth," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 485-512, December.
    6. Galbis, Vicente, 1979. "Money, Investment, and Growth in Latin America, 1961-1973," Economic Development and Cultural Change, University of Chicago Press, vol. 27(3), pages 423-443, April.
    7. Rattan J. Bhatia, 1960. "Inflation, Deflation, and Economic Development," IMF Staff Papers, Palgrave Macmillan, vol. 8(1), pages 101-114, November.
    8. Mr. Arto Kovanen, 2006. "Why Do Prices in Sierra Leone Change So Often? A Case Study Using Micro-level Price Data," IMF Working Papers 2006/053, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Inflation; Exchange rate; policy instrument; regression models; monetary policy;
    All these keywords.

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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