Title:
MONEY GROWTH AND INFLATION IN ZAMBIA: A COINTEGRATION AND CAUSALITY ANALYSIS

Authors:
Felix Chikumbi, Maximillian Mainza (PhD), Albert Chongo, Lincoln Daka

Volume - 2 Issue - 8, Pages - 4347-4375

Abstract:
The study investigated whether money growth is the major determinant of inflation in Zambia, while controlling for the effects of the nominal exchange rate, interests rates and oil prices, using Cointegration, Error correction, and Granger causality analysis. The study found a positive long run relationship between inflation and money supply, nominal exchange rate, and oil prices, while there was a negative long run relationship between inflation and the 91 day treasury bills rate (interest rate). Changes in interest rates have the major role in controlling any deviation of the equilibrium inflation rate, followed by changes in money supply, then changes in oil prices, and lastly, exchange rates. Therefore, money plays a major role in the conduct of monetary policy in Zambia.

Cite this Article:

[Chikumbi, Felix, et al. "MONEY GROWTH AND INFLATION IN ZAMBIA: A COINTEGRATION AND CAUSALITY ANALYSIS." International Journal of Social Science and Economic Research, vol. 2, no. 8, 2017, pp. 4347-4375. August.]