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Studies on Economic Development and Growth in Selected African CountriesRelationship Between Inflation and Real Economic Growth in Rwanda

Studies on Economic Development and Growth in Selected African Countries: Relationship Between... [ThisReal economic growth study examines the impact of economic stability measuresEconomic stability measures (inflation and unemploymentUnemployment rates) on real gross domestic product (GDP) in Rwanda. It uses quarterly data for the period of 2000Q1–2015Q4 collected from the Ministry of Finance and Economic Planning, Central Bank of Rwanda and the National Institute of Statistics of Rwanda (NISR). This study concludes that inflation and unemployment have a long-run negative and significant relationship on real gross domestic product. In the long run, the coefficients are not significant at the 5% level; it is only the inflation coefficient and error which are significant. Real gross domestic product increases when inflation reduces with a p-value of 0.00266; real gross domestic product increases when unemployment reduces with a p-value of 0.09882. The coefficient from the error correction model means that the effect of the shock will reduce by 0.0483% each quarter, meaning that the effect of the shock will reduce by 19.32% in each 4th quarter. This further means that it will end at 20 quarters, that is, after a five-year period. It has to be highlighted that there is a weak relationship between real gross domestic product and both inflation and unemployment rates. ] http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png

Studies on Economic Development and Growth in Selected African CountriesRelationship Between Inflation and Real Economic Growth in Rwanda

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Publisher
Springer Singapore
Copyright
© Springer Nature Singapore Pte Ltd. 2017
ISBN
978-981-10-4450-2
Pages
103 –122
DOI
10.1007/978-981-10-4451-9_6
Publisher site
See Chapter on Publisher Site

Abstract

[ThisReal economic growth study examines the impact of economic stability measuresEconomic stability measures (inflation and unemploymentUnemployment rates) on real gross domestic product (GDP) in Rwanda. It uses quarterly data for the period of 2000Q1–2015Q4 collected from the Ministry of Finance and Economic Planning, Central Bank of Rwanda and the National Institute of Statistics of Rwanda (NISR). This study concludes that inflation and unemployment have a long-run negative and significant relationship on real gross domestic product. In the long run, the coefficients are not significant at the 5% level; it is only the inflation coefficient and error which are significant. Real gross domestic product increases when inflation reduces with a p-value of 0.00266; real gross domestic product increases when unemployment reduces with a p-value of 0.09882. The coefficient from the error correction model means that the effect of the shock will reduce by 0.0483% each quarter, meaning that the effect of the shock will reduce by 19.32% in each 4th quarter. This further means that it will end at 20 quarters, that is, after a five-year period. It has to be highlighted that there is a weak relationship between real gross domestic product and both inflation and unemployment rates. ]

Published: May 3, 2017

Keywords: Real gross domestic products; Inflation; Unemployment; Co-integration; Vector error correction model; E4; E5; E6

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