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What is the effect of inflation on consumer spending behaviour in Ghana?

Author

Listed:
  • Effah Nyamekye, Gabriel
  • Adusei Poku, Eugene

Abstract

The paper examines the effect of inflation on consumer spending behaviour in Ghana during the period 1964 to 2013 using annual data. The analysis of the results was done using Ordinary least square test (OLS), the Johansen test (JH), and Vector Error Correction (VECM) test. The findings of the studies based on the JH tests showed stable significant long run relationship between inflation and consumer spending behaviour. The findings of the study shows significant short run relationship between inflation and consumer spending using the VECM. The results of the OLS test show there is positive relationship between inflation and consumer spending behaviour. Policy makers should take into account the findings of the study in managing the economy. Future studies on causality and structural break are worth undertaking.

Suggested Citation

  • Effah Nyamekye, Gabriel & Adusei Poku, Eugene, 2017. "What is the effect of inflation on consumer spending behaviour in Ghana?," MPRA Paper 81081, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:81081
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    References listed on IDEAS

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    More about this item

    Keywords

    Inflation; consumer spending behaviour; long run; short run;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation
    • P44 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - National Income, Product, and Expenditure; Money; Inflation
    • P46 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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