IS INFLATION ALWAYS AND EVERYWHERE A NON-MONETARY PHENOMENON: EVIDENCE FROM UGANDA

This paper examines the determinants of Uganda’s inflation rate during 1994M7-2005M6. We test the central hypothesis that Uganda’s inflation rate is always and everywhere a non-monetary phenomenon. A theoretical background relating inflation to monetary and other non-monetary factors is first analyzed before a detailed empirical analysis is done. We apply ARDL approach to cointegration methods of analysis due to lack of a pure set of I(0) or I(1) for all the series. The results suggest insufficient evidence to accept the research hypothesis, as Uganda’s inflation rate is significantly correlated with both monetary and non-monetary factors.