Multivariate Time Series A Data Analysis on Real Economic Activity Data Case Study: Ghana, November 1990 to December 2011

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2013-06-08
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Abstract
One of the key objectives of every economy whether or not developing or developed is to achieve a high and sustained economic growth rate coupled with low rates of inflation and interest rate. The real sector growth is particularly the concern, considering the effects that inflation and interest rate could have on it. As a result, this study investigates the nexus between interest rate, inflation and real economic activity in Ghana for the period November, 1990 to December, 2011. The study employed the newly developed multivariate cointegration estimation technique via vector autoregression modeling. The results show that there exists a unique long run relationship between real economic activity and its covariates, although these variables were found to be nonstationary at their levels. Further, interest rate and inflation are identified as important determinants of real economic activity growth in Ghana. The obverse showed that real economic activity does not significantly determine inflation and interest rate. Interestingly, the immediate results suggest the need to critically look at the prime rate and therefore interest rate to help streamline the investment patterns of the economy although according to the study period the interest rate does not affect real activity.
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A thesis submitted to the Department of Mathematics, Kwame Nkrumah University of Science and Technology in partial fulfillment for the requirements for the degree of MASTER OF SCIENCE (INDUSTRIAL MATHEMATICS) INSTITUTE OF DISTANCE LEARNING.June,2013
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