International Journal of Economics and Business Administration
Articles Information
International Journal of Economics and Business Administration, Vol.4, No.2, Jun. 2018, Pub. Date: May 28, 2018
The Relationship Between Economic Growth and Inflation Rate Flactuations: Evidence from Zambia
Pages: 52-55 Views: 1527 Downloads: 541
Authors
[01] Clement Mwaanga, Department of Business Studies, Mulungushi University, Kabwe, Zambia.
[02] Nsama Musawa, Department of Business Studies, Mulungushi University, Kabwe, Zambia.
Abstract
The study of the relationship between economic growth rate and the inflation rate has gained popularity among scholars and most of these studies have revealed inconclusive results. Some studies have found no relationship between the two variables while others have found negative and positive relationship. This study will contribute to the existing literature by employing data extracted from IMF statistics for the period from 1995 to 2017 a period of 22 years. In order to analyse the data, Johanson Co-integration analysis was used to establish the long run relationship while the Error Correction Model was used to establish the short run relationship. The co-integration analysis results indicate the existence of long run relationship between economic growth rate and the inflation rate. However the Error Correction Model showed that there is no significant short run relationship. At a practical level, the study provides an insight to policy makers for setting the inflation rate target and expansionary monetary policy aimed at enhancing economic growth.
Keywords
Economic Growth, Inflation Rate, Domestic Purchasing Power, Price Stability, Co-integration
References
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