Inflation and economic growth in Cote d'Ivoire

Authors

  • Konan Leon N'dri UFR of Economics and Management University Félix Houphouet Boigny, Abidjan, Côte d’Ivoire.

DOI:

https://doi.org/10.18533/jefs.v5i02.271

Keywords:

inflation, economic growth, ARDL, Côte d’Ivoire

Abstract

This paper investigates the relationships between inflation and economic growth in Cote d’Ivoire and makes some policy recommendations. The study uses annual data on economic growth and inflation over the period 1985 to 2010 and tests for the long-run and short-run relationships between inflation and economic growth by means of the ARDL bounds testing procedure. The findings are twofold. First, inflation imparts a positive and significant economic growth in the long-run. Second, in the short-run, inflation has a negative but insignificant effect on economic growth. Finally, to gain advantage from inflation, policy makers should target inflation at a level which is conducive to economic growth and promote economic growth through factors such as employment.

Author Biography

  • Konan Leon N'dri, UFR of Economics and Management University Félix Houphouet Boigny, Abidjan, Côte d’Ivoire.
    Associate Professor of Finance, Department of Economics and Management, University Felix Houphouet Boigny, Abidjan, Cote d'Ivoire

References

Barro, R. J., (1995). Inflation and Economic Growth. National Bureau of Economic Research (NBER) Working Paper, No. 5326.

Faria, J.R. and Carneiro.F.G. (2001), “Does high inflation affect growth in the long and short-run?. Journal of Applied Economics. 5(1), 89-105.

Hossain, E., Ghosh, B.C. and Islam, K., (2012). Inflation and economic growth in Bangladesh. International Refereed Research Journal. 4(2), 85-92.

Johansen, S. and Juselius, K., (1990). Maximum Likelihood Estimation and Influence on Co-integration with Application to the Demand for Money, Oxford Bulletin of Economics and Statistics, 52, 169-210.

Johansen, S., (1988). Statistical Analysis of Cointegration Vectors. Journal of Economic Dynamics and Control. 12, 231-54.

Kigume, R. W., (2011). The relationship between inflation and economic growth in Kenya, 1963-2003. International Journal of Business and Social Science, III(10).

Mallik, G. and Chowdhury, A., (2001). Inflation and Economic Growth: Evidence from Four South American Countries. Asia-Pacific Development Journal. 8(1), 123-133.

Mamo, F.T. (2012). Economic Growth and Inflation: A panel data analysis. Master’s Thesis, Department of Social Sciences, Economics, Södertörns University, Sweden.

Osuala, A.E., Osuala, K. I., and Onyeike, S. C., (2013). Impact of Inflation on Economic Growth in Nigeria – A Causality Test. Journal of Research in National Development. 11(1), 206-216.

Pesaran, M.H. and Shin, Y., (1999). An autoregressive distributed lag modelling approach to cointegration analysis. In: Strøm S. editor. Econometrics and economic theory in the twentieth century: the Ragnar Frisch Centennial Symposium, Cambridge: Cambridge University Press.

Pesaran, M.H., Shin, Y. and Smith, R.J., (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics. 16, 289-326.

Phillips, A. W. H., (1958). The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861–1957. Economica, n.s., 25, no. 2: 283–299.

Phillips, P. C. and Perron, P., (1988). Testing for a Unit Root in Time Series Regressions. Biometrica. 75, 335-346.

Sattarov, K., (2011). Inflation and Economic Growth Analyzing the Threshold Level of Inflation: Case Study of

Finland, 1980-2010. Master’s Thesis. 15 ECTS. UMEA University, Sweden.

Sidrauski, M., (1967). Rational Choice and Patterns of Growth in a Monetary Economy. American Economic Review. 57(2), 534-544.

Stockman, A. C., (1981). Anticipated Inflation and the Capital Stock in a Cash-in-Advance Economy. Journal of Monetary Economics. 387-393.

Thanh, S. D., (2015). Threshold effects of inflation on growth in the ASEAN-5 countries: A Panel Smooth Transition Regression approach. Journal of Economics, Finance and Administrative Science. 20, 41–48.

Tobin, J., (1965). Money and Economic Growth. Econometrica, 33, 671-684.

Veni, L.K. and Choudhury, P.K., (2007). Inflation and Growth Dilemma: An Econometric Analysis of the Indian Economy. The IUP Journal of Financial Economics. 5(1), 79-87.

World Bank, (2015). World Bank Development Indicators, World Bank, Washington D.C., http://data.worldbank.org/products/wdi.

Xiao, J., (2009). The Relationship between Inflation and Economic Growth of China: Empirical Study from 1978 to 2007. Master’s Thesis, School of economics and Management, Lund University, Sweden.

Downloads

Published

2017-04-04

Issue

Section

Articles