Abstract
Does inflation affect economic growth in Botswana over the short-run and long-run? In applying bounds procedure for modelling ARDL cointegation effects applied to empirical data collected between 1975 and 2016 we find that this hypothesis does not hold true for Botswana as inflation is found to be insignificantly related with economic growth over both the short and long-run. Our growth equation estimates point to exports (positive), government size (negative) and an Pula/Dollar exchange rate (negative) as being significantly correlated with steady-state GDP growth. Further empirical exercises show that an appreciated Pula/dollar exchange rate increases inflation whilst bearing no effect on economic growth. Conversely, a depreciated Pula/Dollar exchange simultaneously decreases inflation and economic growth for the Botswana economy. Policymakers should be this aware that attainment of lower inflation rates which occurs through a depreciated Pula/Dollar currency will only retard economic growth.
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Articles in the same Issue
- Articles
- What is the Spillover Effect of the U.S. Equity and Money Market on the Key Latin American Agricultural Exports?
- Does Institution Explain Natural Resource Curse?
- Regional Development Discrepancies in the Eastern European Union Analysed through the Prism of Growth Determinants
- Effects of Economic Globalization, Foreign Capital Influx on Export in ECOWAS
- Inflation-Growth Nexus in Botswana: Can Lower Inflation Really Spur Growth in the Country?
Articles in the same Issue
- Articles
- What is the Spillover Effect of the U.S. Equity and Money Market on the Key Latin American Agricultural Exports?
- Does Institution Explain Natural Resource Curse?
- Regional Development Discrepancies in the Eastern European Union Analysed through the Prism of Growth Determinants
- Effects of Economic Globalization, Foreign Capital Influx on Export in ECOWAS
- Inflation-Growth Nexus in Botswana: Can Lower Inflation Really Spur Growth in the Country?