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Title: THE IMPACT OF EXCHANGE RATE FLUCTUATIONS AND MONEY SUPPLY ON INFLATION IN SIERRA LEONE (1986-2019)
Authors: Mohamed Ibrahim Justice Ganawah
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Mohamed Ibrahim Justice Ganawah Lecturer at the Department of Economics and Commerce Fourah bay College, University of Sierra Leone
MLA 8 Ganawah, Mohamed Ibrahim Justice. "THE IMPACT OF EXCHANGE RATE FLUCTUATIONS AND MONEY SUPPLY ON INFLATION IN SIERRA LEONE (1986-2019)." Int. j. of Social Science and Economic Research, vol. 6, no. 2, Feb. 2021, pp. 430-457, doi:10.46609/IJSSER.2021.v06i02.004. Accessed Feb. 2021. APA 6 Ganawah, M. (2021, February). THE IMPACT OF EXCHANGE RATE FLUCTUATIONS AND MONEY SUPPLY ON INFLATION IN SIERRA LEONE (1986-2019). Int. j. of Social Science and Economic Research, 6(2), 430-457. doi:10.46609/IJSSER.2021.v06i02.004 Chicago Ganawah, Mohamed Ibrahim Justice. "THE IMPACT OF EXCHANGE RATE FLUCTUATIONS AND MONEY SUPPLY ON INFLATION IN SIERRA LEONE (1986-2019)." Int. j. of Social Science and Economic Research 6, no. 2 (February 2021), 430-457. Accessed February, 2021. doi:10.46609/IJSSER.2021.v06i02.004.
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Abstract: This paper aims at providing quantitative analysis of the impact of money Supply and exchange rate fluctuations on inflation in Sierra Leone. The paper utilizes secondary data that were obtained from the International Financial Statistics (IFS), of all variables investigated in the model. The sample covers quarterly data from 1986:01 to 2019:04. The model was estimated using Vector Error Correction Mechanism (VECM). The empirical results confirm that in the long run, money supply and exchange rate have significant inverse effects on inflationary pressure, while real output growth and foreign price changes have direct effects on inflationary pressure. The possible justification for the inverse effect of money supply on price level is that inflation may not be due to aggregate demand pressure but rather due to hiccups in the supply chain of goods both from the domestic and foreign supply outlets. Empirical deductions also signify the presence of significant feedback from the long run to short run disequilibrium. However, there exists a causal linkage between inflation, money supply and exchange rate in Sierra Leone.

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