Research Papers On Inflation

Research Papers On Inflation-33
Over the years, changes in prices have been a visible characteristic of the Ghanaian economy, hence the nonconstant inflation rates.

These uncertainties can, however, cause an increase or decrease in price of stocks, which may affect the demand and supply of stocks in general.

The consequence of this instability in price level is that it may affect potential investor’s decision to invest and in turn have a negative impact on the total returns on stocks at large.

The variables were tested for long memory and it was observed that such property did exist in these variables, making it a desirable feature of which investors can take advantage of.

This is due to the establishment of long-run effect of inflation and exchange rate on stock market returns.

The result showed no long-run relationship among the variables.

Banny and Enlaw [9] analyzed the link between the Malaysian ringgit in relation to the US dollar and prices of stock in Kuala Lumpur Stock Exchange (KLSE).

According to Ibrahim and Agbaje [3], inflation fluctuations can create uncertainty in an economy.

This uncertainty, according to them, can make both local and foreign investors unwilling to invest due to the effect they could have on their returns.

He discovered that the elasticity of real income was positive, while that of inflation and exchange rate was negative.

Tian and Ma [5] employed the cointegration ARDL approach to study the relationship between exchange rate and the Chinese share market.


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