Abstract

Using time series estimations of simple forward and backward-looking Taylor type reaction functions to characterise monetary policy rules, this paper assesses to what extent these rules provide a description of interest rate response to inflation in Ghana, a developing African country widely regarded as having relatively strong state actors and good governance. Ghana’s central bank officially adopted an inflation-targeting monetary policy in March 2002 following its operational independence. The paper finds that Taylor rule is not a good predictor of interest rate behaviour.

This work is licensed under a Creative Commons Attribution 4.0 License.