Understanding Global Commodity Price Shocks on Exchange Rates and Inflation in Emerging Economies: ARDL Perspective

Seth Acquah Boateng, Frank Agyemang Karikari, Michael Provide Fumey, Emmanuel Ekow Asmah and Stephen Antwi Winful
Additional contact information
Seth Acquah Boateng: Department of Data Science and Economic Policy, University of Cape Coast, PMB, Cape Coast, Ghana.
Frank Agyemang Karikari: Department of Accounting, University of Cape Coast, University of Cape Coast, PMB, Cape Coast, Ghana.
Michael Provide Fumey: School of Public Policy and Administration, Northwestern Polytechnical University, Xi’an, 710072, P.R.C., China.
Emmanuel Ekow Asmah: Department of Data Science and Economic Policy, University of Cape Coast, PMB, Cape Coast, Ghana.
Stephen Antwi Winful: Department of Finance, University of Cape Coast, PMB, Cape Coast, Ghana.

Post-Print from HAL

Abstract: Aims: To analyze the changing relationship between commodity prices (cocoa, diesel, gold, oil, petrol) and macroeconomic factors (exchange rate and inflation) in Ghana and differentiate between long-term and short-term effects. Study Design: Quantitative Design with Time series analysis using the Autoregressive Distributed Lag (ARDL) technique. Methodology: The study utilized cointegration and Error Correction Model in econometric estimation. Time series data for commodity prices and macroeconomic factors were collected for the period 2003M01 to 2023M10. The ARDL technique was applied to differentiate between long-term and short-term effects of inflation and exchange rates. Results: The short-run and long-run results indicate a positive relationship between commodity prices and inflation and exchange rates. A 1% increase in diesel prices is associated with a 0.23% appreciation in Ghana's currency in the short run (p=0.019) and a 1.76% rise in inflation in the long run (p=0.012). Past inflation has a dominant influence on current inflation, with a 1 percentage point increase in the previous year's inflation leading to a 0.45 percentage point increase in the current inflation rate. Conclusion: Policymakers should prioritize stabilizing diesel prices, invest in storage facilities, promote alternative energy sources, strengthen domestic production and distribution of essential commodities, and adopt targeted monetary and fiscal policies to anchor inflationary expectations and address inflation inertia in Ghana.

Date: 2024-04-13
References: Add references at CitEc
Citations:

Published in Journal of Economics, Management and Trade, 2024, 30 (5), pp.33-47. ⟨10.9734/jemt/2024/v30i51208⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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:hal:journl:hal-05101069

DOI: 10.9734/jemt/2024/v30i51208

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().