The Relationship between Exports and Inflation in Kenya: An Aggregated Econometric Analysis
Journal Title: Asian Journal of Economics, Business and Accounting - Year 2017, Vol 3, Issue 1
Abstract
Aim: This paper tries to identify the relationship between exports and inflation in Kenya: An aggregated econometric analysis. Study Design: The analysis is based on the demand pull theory of inflation and on applied correlation research design using monthly time series data from Central Bank of Kenya for the 132 months between January 2005 and December 2015. Methodology: Vector autoregressive analytical techniques of Johansen cointegration, vector error correction, variance decomposition, impulse response and Granger causality are employed in order to comprehensively analyze the relationship between inflation and exports in Kenya. Results: The results indicate that inflation has a significant positive long run relationship with total exports. This is a conclusion supported by variance decomposition and impulse analysis with a coefficient of 1.39 at 5% level of significance, implying that a percentage increase in total exports increases long-run inflation in Kenya by 1.39%. In the short run, past values of total exports influence inflation negatively and there is a unidirectional causality from total exports to inflation. Conclusion: Total exports are found to affect inflation in Kenya critically; it is recommended that the government adopts trade policies targeting a reduction in total exports as they are likely to lower the shortage of these products in the domestic market, lowering thereby their prices and their contribution inflation in Kenya.
Authors and Affiliations
Evans Ovamba Kiganda, Nelson Obange, Scholastica Adhiambo
Keywords
Related Articles
- EP ID EP338507
- DOI 10.9734/AJEBA/2017/33192
- Views 128
- Downloads 0
Customers and Employees Assessment of Corporate Branding Benefits
Corporate branding has become an important tool employed by many industries in recent decades. It is described as the subliminal process by which industries use marketing strategies to attract customers to easily remembe...
Critical Factors for Suppliers’ Assessment and Selection: Empirical Evidence from Public Institutions in a Developing Country
This study examined the critical factors that influence the selection and assessment of suppliers in public institutions in Ghana. The study employed both descriptive and survey research design. The study was conducted b...
Role of Microfinance Banks Credit in the Development of Small and Medium Enterprises in Lokoja, Kogi State, Nigeria
The study employed descriptive research design to investigate the role of Microfinance Banks credits in the development of Small and Medium Enterprises in Lokoja, Kogi State, Nigeria. Descriptive statistics and Chi-squar...
Accountability and Transparency Hurdles of Post Democratic Regime in Nigeria: Economic Implications
With increasing activities of separatists and agitators for self independence taking a heavy toll on the sovereignty of Nigeria, more curiosity has once again been drawn to the accountability strength, transparency quali...
An Empirical Analysis of the Impact of Exchange Rate Devaluation on Trade Balance of Nigeria: Vector Error Correction Model Approach
The study empirically investigated the impact of exchange rate devaluation on trade balance of Nigeria for the period 1980-2015. Specifically, it tested the Marshall-Lerner (ML) conditions for Nigeria’s case to see wheth...