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What is the effect of Inflation on Manufacturing Sector Productivity in Ghana?

Author

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  • Bans-Akutey, Mawufemor
  • Yaw Deh, Isaac
  • Mohammed, Faisal

Abstract

Using annual time series data for Ghana, the current study investigates the effect of inflation on manufacturing sector productivity for the period 1968-2013. The empirical verification is done by using the Johansen test (JT), the Vector Error Correction Model (VECM), and the Ordinary Least Squares (OLS) regression test. The results indicate significant stable long run relationship between inflation and manufacturing sector productivity. However, there is insignificant short run link between inflation and manufacturing sector productivity in the VECM. The results of the OLS test indicate negative significant link between inflation and manufacturing sector productivity. The findings suggest that inflation has led to a decrease in manufacturing sector productivity. Policy makers should manage inflation very well in order to improve manufacturing sector productivity. Future study should examine the current topic accounting for causality and structural breaks issues since the present study did not consider these issues.

Suggested Citation

  • Bans-Akutey, Mawufemor & Yaw Deh, Isaac & Mohammed, Faisal, 2016. "What is the effect of Inflation on Manufacturing Sector Productivity in Ghana?," MPRA Paper 75145, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:75145
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    File URL: https://mpra.ub.uni-muenchen.de/75145/1/MPRA_paper_75145.pdf
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    References listed on IDEAS

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    1. Federico Guerrero & Elliott Parker, 2006. "Deflation, Recession and Slowing Growth: Finding the Empirical Links," The IUP Journal of Monetary Economics, IUP Publications, vol. 0(1), pages 37-49, February.
    2. Guerrero, Federico & Parker, Elliott, 2006. "Deflation and recession: Finding the empirical link," Economics Letters, Elsevier, vol. 93(1), pages 12-17, October.
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    Cited by:

    1. Valery V. Bezpalov & Sergey A. Lochan & Dmitry V. Fedyunin & Irina V. Polozhentseva & Tatiana V. Gorina, 2022. "Relationship between Complex Integration Indices and Inflation Indicators and Their Impact on the Development of Regional Cooperation between Countries to Reduce the Level of Inflationary Risks: Case ," Risks, MDPI, vol. 11(1), pages 1-26, December.
    2. Wabei Catherine Mutafu, 2023. "Evaluation of the Impact of the Lusaka Stock Exchange on the Financial Performance of Telecommunication Companies in Zambia: A Study of Airtel Zambia Limited (2012 – 2021)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(6), pages 494-508, June.

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    More about this item

    Keywords

    Manufacturing sector productivity; Inflation; Long run; Short run;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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