Inflation targeting and inflation management in Ghana

Purpose – The Ghanaian economy has experienced relative stability, improved macroeconomic performance and resilience over the past few years, following the introduction of a new monetary policy framework called inflation targeting (IT). The purpose of this paper is to look at IT and its effect on inflation management in Ghana. Design/methodology/approach – The study employed monthly time series data from 1980 to 2009. Findings – The results gathered in this study demonstrate that IT has had a significant impact on the reduction of inflation series in recent years and has reduced the persistence of inflation series considerably. It is largely amplified that the implementation of an IT framework in Ghana has been a success and has contributed to a change in the conduct of monetary policy towards best practice. Research limitations/implications – The study could have used a lot more macroeconomic variables. Practical implications – The paper's findings are very important for Central Banks that are using the IT framework, or planning to do so, for efficiency and effectiveness. Originality/value – The paper is the first of its kind for developing countries, especially in Africa and Ghana for that matter.