Inflation-Growth Nexus in Botswana: Can Lower Inflation Really Spur Growth in the Country?

Mothuti Gosego and Andrew Phiri
Additional contact information
Mothuti Gosego: Department of Economics, Nelson Mandela University, Port Elizabeth, South Africa

Global Economy Journal, 2018, vol. 18, issue 4, 11

Abstract: Does inflation affect economic growth in Botswana over the short-run and long-run? In applying bounds procedure for modelling ARDL cointegation effects applied to empirical data collected between 1975 and 2016 we find that this hypothesis does not hold true for Botswana as inflation is found to be insignificantly related with economic growth over both the short and long-run. Our growth equation estimates point to exports (positive), government size (negative) and an Pula/Dollar exchange rate (negative) as being significantly correlated with steady-state GDP growth. Further empirical exercises show that an appreciated Pula/dollar exchange rate increases inflation whilst bearing no effect on economic growth. Conversely, a depreciated Pula/Dollar exchange simultaneously decreases inflation and economic growth for the Botswana economy. Policymakers should be this aware that attainment of lower inflation rates which occurs through a depreciated Pula/Dollar currency will only retard economic growth.

Keywords: inflation; economic growth; exchange rates; Bank of Botswana; nonlinear autoregressive distributive lag (N-ARDL) model (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.1515/gej-2018-0045 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
Working Paper: Inflation-growth nexus in Botswana: Can lower inflation really spur growth in the country? (2018)
Working Paper: inflation-growth nexus in Botswana: Can lower inflation really spur growth in the country? (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:glecon:v:18:y:2018:i:4:p:11:n:1

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/gej/html

DOI: 10.1515/gej-2018-0045

Access Statistics for this article

Global Economy Journal is currently edited by Jannett Highfill

More articles in Global Economy Journal from De Gruyter
Bibliographic data for series maintained by Peter Golla ().