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Abstract
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Article Information:
Empirical Approach to Modelling and Forecasting Inflation in Ghana
Nasiru Suleman and Solomon Sarpong
Corresponding Author: Nasiru Suleman
Submitted: April 13, 2012
Accepted: May 06, 2012
Published: June 30, 2012 |
Abstract:
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Inflation measures the relative changes in the prices of commodities and services over a period
of time. In other to devise better policies to control the inflation rates it is necessary to know the pattern of
inflation in the country. In this study, we employed an empirical approach to modelling monthly data in
Ghana using the Box-Jenkins approach. The result showed that ARIMA (3, 1, 3) (2, 1, 1)12 model was
appropriate for modelling the inflation rates. This model has the maximum log-likelihood of 242.90 and the
least AIC of -465.80, AICc of -464.89, BIC of -430.51, RMSE of 0.080, MAPE of 1.902 and MAE of
0.054. Diagnostic test of the model residuals with the ARCH LM-test and Durbin-Watson test indicates that
there was no ARCH effect and autocorrelation in the residuals respectively. Finally, an 11 months forecast
for the year 2012 with the model revealed that Ghana is likely to experience single digit inflation values.
Hence, we recommend that government and other policy makers should adopt appropriate measures to
ensure that the objective of achieving single digit inflation value is met.
Key words: Box-Jenkins, empirical, Ghana, inflation, , ,
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Cite this Reference:
Nasiru Suleman and Solomon Sarpong, . Empirical Approach to Modelling and Forecasting Inflation in Ghana. Current Research Journal of Economic Theory, (3): 83-87.
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ISSN (Online): 2042-485X
ISSN (Print): 2042-4841 |
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