Econometric analys of relationship between exchange rate and inflation: A case study of Ghana

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The purpose of this study is to predict inflation rates for Ghana, based on past exchange rate data. The project was motivated by the instability of general price levels in Ghana and the detrimental effects it has on the economy. The study seeks to determine if inflation rates in Ghana be predicted based on past exchange rate data. Forecasting inflation rates will aid the government to devise more precise policies to tackle the expected rates and assist individuals with contingent planning. The study uses a quantitative research method to examine the subject matter, in the form of a time series regression analysis. The data employed has a monthly frequency and spans from 1999 to 2018. Quantitative data for the intended analysis was retrieved from the World Bank and Bank of Ghana, however data from past literature journals, reports, and books were also analysed and discussed. A negative correlation between exchange rate and inflation is expected from the analysis such that an appreciation; increase in the value, of the Ghanaian Cedi would yield lower inflation rates.
Undergraduate thesis submitted to the Department of Business Administration, Ashesi University, in partial fulfillment of Bachelor of Science degree in Business Administration, May 2020
exchange rate, inflation rate, Ghana, macroeconomic variables, economic policy