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Abstract
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Article Information:
Modeling the Pattern of Reserve Money Growth in Ghana
Nasiru Suleman and Solomon Sarpong
Corresponding Author: NASIRU SULEMAN
Submitted: January 21, 2011
Accepted: February 17, 2011
Published: April 30, 2012 |
Abstract:
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The role played by reserve money growth cannot be ignored in the development of a country. Thus,
this study describes an empirical approach to modeling monthly reserve money growth in Ghana using
SARIMA model. The result showed that ARIMA (0, 1, 1)×(0, 0, 1)12 model was appropriate for modeling the
reserve money growth. This model has the least AIC of 608.91, AICc of 609.18, BIC of 616.44, RMSE of 6.33,
MAPE of 16.90 and MAE of 4.39, respectively. Diagnostic test of the model residuals with the ARCH LM-test
and Durbin-Watson test indicates that there is no ARCH effect and autocorrelation in the residuals respectively.
Finally, a twenty eight months forecast with the model showed that from the middle of the year 2011 to
December, 2012, there will be an increase in the reserve money growth. Hence, we recommend that the
government and other policy holders should devise appropriate measures to slow the growth since the country
is not experiencing low inflation.
Key words: Forecast, Ghana, reserve money, SARIMA, , ,
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Cite this Reference:
Nasiru Suleman and Solomon Sarpong, . Modeling the Pattern of Reserve Money Growth in Ghana. Current Research Journal of Economic Theory, (2): 39-42.
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ISSN (Online): 2042-485X
ISSN (Print): 2042-4841 |
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