Theoretically proposed policy instrument to address the negative effect of inflation inflow into positive macroeconomic growth: the case study of the Sierra Leone economy

Emmanuel Senzu

MPRA Paper from University Library of Munich, Germany

Abstract: The paper empirically examines the predictive factor of the inflation rate observed to be the vector force of macroeconomic management as in the rise and fall of the currency exchange value of the Sierra Leone economy. Thereby adopting a statistical tool of an exogenous univariate auto-regression integrated moving average, to build a forecasting model between the open-market-exchange rate and the inflation rate to establish the degree of correlation effect, as a basis to theoretically prescribe a policy instrument, a means to maximize economic transaction beneficial for sustainable macroeconomic growth. This leads to established findings, that an average price shift of +/- 0.032 of the Leone currency price with the US dollar at the open market, always causes a percentage point change of inflation to the endogenous economy, when all other factors remain constant.

Keywords: Inflation; Exchange rate; policy instrument; regression models; monetary policy (search for similar items in EconPapers)
JEL-codes: E17 E5 E52 E58 (search for similar items in EconPapers)
Date: 2021-10-07
New Economics Papers: this item is included in nep-mac and nep-mon
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Published in Social Science Research Network Summer, 2 (7).X2(2020): pp. 1-25

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