Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/270168 
Year of Publication: 
2021
Citation: 
[Journal:] Cogent Economics & Finance [ISSN:] 2332-2039 [Volume:] 9 [Issue:] 1 [Article No.:] 1988201 [Year:] 2021 [Pages:] 1-18
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
Although literature acknowledges the nonlinearity in monetary policy behaviour of central banks, the appropriateness of the models used to capture the nonlinearity remains questionable. Moreover, the paucity of research on nonlinear monetary policy rules in the context of Africa and Ghana in particular is worrying, given the numerous breaches of the publicly announced inflation targets. The study estimates the Bank of Ghana's policy responses over the inflation targeting period using the Taylor rule. We find that the Bank of Ghana reacts asymmetrically to inflation gap below and above the estimated inflation threshold of 16.4% with considerable inflation accommodation instead of targeting it. We question the logic behind the prevailing upper and lower bounds inflation target given the evidence to the contrary. The average inflation over the targeting period, the estimated inflation threshold and the structure of the Ghanaian economy raise questions of feasibility of achieving the inflation target on sustainable basis. Policy implications are discussed.
Subjects: 
Inflation Targeting
Monetary Policy Rule
Sample Splitting
Threshold
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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