Dynamics of inflation and its effects on the Kenyan economy

A Research project Submitted in partial fulfillment of the requirements for the degree of Bachelor of Business Science in Financial Economics at Strathmore UniversityThe study on the relationship between economic growth and inflation has attracted attention from both researchers and policy makers. A high and sustained economic growth with low and stable inflation is the central objective of most policy makers. The main purpose of this study is to ascertain the nature of the relationship between inflation and economic growth in Kenya. One of the most important objectives for any countries is to sustain high economic growth. Even though there are main factors that affect economic growth, the concern of this paper is only about inflation. The relationship between economic growth and inflation is debatable. The first objective of this study is to investigate the relationship between inflation and economic growth. To analyze the data the model is formed by taking economic growth as dependent variable and four variables (i.e. inflation, investment, population and initial GDP) as independent variables. The result indicates that there is a negative relationship between economic growth and inflation