University of Khartoum

The Relationship between Inflation and Economic Growth in Sudan (1970- 2013)

The Relationship between Inflation and Economic Growth in Sudan (1970- 2013)

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Title: The Relationship between Inflation and Economic Growth in Sudan (1970- 2013)
Author: Daffalla, Elgunid Mohammed Abdalla
Abstract: This study aims at investigating the nature of the relationship between inflation and economic growth in the short and long run in Sudan for the period 1970 -2013. The importance of the study stems from the on-going debate on the nature of inflation and economic growth relationship. One of the most important objectives of macroeconomic policies in Sudan is to sustain high economic growth rate together with low rate of inflation. The research employs the unit root to test the stability of the time series data period and the co- integration model ‘’Johnson test’’ .Besides, it uses the vector error correction ‘’VEC’’ to get acquaintance with the nature of the relationship between the two variables in the short and long run .The data were collected from secondary sources. Based on the econometric analysis, the findings revealed that there is an inverse relationship between inflation and economic growth in the short run and there is no effective relationship between the two variables in the long run .Therefore, the study recommends that economic policy makers should be concerned in short run to the stability of macroeconomic variables that would leads to economic stability. Moreover, it recommends the necessity of laying down monetary and financial policies that lead to the reduction of the money supply which in turn will lead to the reduction of the rate of inflation. In the long run policy makers should take into consideration other economic variables, such as population growth rate and productivity, so as to achieve sustainable growth rates
URI: http://khartoumspace.uofk.edu/123456789/27043


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