A Model for Full-Fledged Inflation Targeting and Application to Ghana
A Model for Full-Fledged Inflation Targeting and Application to Ghana

Author: Jihad Dagher

Publisher: International Monetary Fund

Published: 2010-01-01

Total Pages: 32

ISBN-13: 1451962444

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A model in which monetary policy pursues full-fledged inflation targeting adapts well to Ghana. Model features include: endogenous policy credibility; non-linearities in the inflation process; and a policy loss function that aims to minimize the variability of output and the interest rate, as well as deviations of inflation from the long-term low-inflation target. The optimal approach from initial high inflation to the ultimate target is gradual; and transitional inflation-reduction objectives are flexible. Over time, as policy earns credibility, expectations of inflation converge towards the long-run target, the output-inflation variability tradeoff improves, and optimal policy responses to shocks moderate.

Does Money Matter for Inflation in Ghana?
Does Money Matter for Inflation in Ghana?

Author: Arto Kovanen

Publisher:

Published: 2011-11-01

Total Pages: 132

ISBN-13:

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Money has only limited information value for future inflation in Ghana over a typical monetary policy implementation horizon (four to eight quarters). On the other hand, currency depreciation and demand pressures (as measured by the output gap) are shown to be important predictors of future price changes. Inflation inertia is high and inflation expectations are largely based on backward-looking information, suggesting that inflation expectations are not well anchored and hence more is needed to strengthen the credibility of Ghana''s inflation-targeting regime.1

Ghana: Selected Issues
Ghana: Selected Issues

Author: International Monetary Fund

Publisher: INTERNATIONAL MONETARY FUND

Published: 2008-10-09

Total Pages: 36

ISBN-13: 9781451815009

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This Selected Issues paper on Ghana shows that as a small, open low-income economy, the country faces several major challenges in its conduct of disinflation policy. Ghana has historically experienced volatile and often high inflation rates. The paper also presents a model that recognizes difficulties being faced by Ghana, among them less-than-perfect credibility of announcements of inflation reduction and policymaker aversion both to movements of output from its potential level and to variability in the interest rate.