Interaction entre la croissance économique, l’inflation et le taux de change au Kenya

The issue of the interaction between economic growth, inflation and exchange rate in Kenya, has been the subject of this paper. In order to empirically analyze the relationship between these three variables in the kenyan context (from 1960 to 2020), SVAR and ARDL (with bounds test cointegration) models have been used in this study. This paper has mainly led to the following results : (i) according to Granger test, there are no significant causal relationships between economic growth, inflation and exchange rate in Kenya; (ii) with short-term theoretical restrictions on the SVAR model, a significant appreciation of the kenyan local currency would cause the kenyan inflation rate to increase slightly; (iii) the kenyan exchange rate and inflation rate would react positively to endogenous and exogenous shocks but negatively to real sector ones; (iv) the impulse responses of Kenya’s economic growth would be negative in the event of exogenous shocks and positive in the event of endogenous ones; (v) with an ARDL model, in the short run, a depreciation of the kenyan local currency by 10% would lead to a 15.18% increase in the kenyan inflation rate; (vi) the significant long-term relationship (cointegration with bounds) between inflation, economic growth and exchange rate in Kenya has shown that, a 10% depreciation of the kenyan Shilling would lead to a 7.01% rise of this country’s inflation; (vii) in the long run, the kenyan economy would have an inflationary memory (inflation would also depends on its past values).