THRESHOLD EFFECTS OF INFLATION ON ECONOMIC GROWTH IN RWANDA

Abstract: The objective of this thesis was to estimate the threshold effects of inflation on economic growth in Rwanda. Time-series data from 1972-2021 were accessed from World Bank and analyzed using both LS and 2SLS Threshold Model. GDP growth rate, investment growth rate, inflation rate and population growth rate and other instrumental variables were used to model the equation estimated. Therefore, the study explored the threshold level of inflation being 6 percent, which means that below 6% stimulate the economy growth while beyond it can hamper economic growth. Mainly, the findings proved that Rwanda has a moderate inflation threshold level compared to other developing countries whereby inflation threshold fluctuate above 6% and 15%. Concluding, this research revealed the up bound where inflation rate should not go beyond for stimulating the economy and it is known that low inflation rate drives the economic growth. So, there is a need to conduct a research for determining that low level of inflation that could not affect the economic growth. As well, other researchers are called upon to conduct the research on the effect of inflation threshold in Rwanda using other techniques and variables for exploring inflation dynamics on economic growth in advance. Keywords: Inflation threshold level; economic growth; inflation rate; inflation dynamics; time series. Title: THRESHOLD EFFECTS OF INFLATION ON ECONOMIC GROWTH IN RWANDA Author: NSABIYAREMYE JEAN D’AMOUR International Journal of Management and Commerce Innovations ISSN 2348-7585 (Online) Vol. 10, Issue 2, October 2022 - March 2023 Page No: 364-372 Research Publish Journals Website: www.researchpublish.com Published Date: 24-January-2023 DOI: https://doi.org/10.5281/zenodo.7565502 Paper Download Link (Source) https://www.researchpublish.com/papers/threshold-effects-of-inflation-on-economic-growth-in-rwandaInternational Journal of Management and Commerce Innovations, ISSN 2348-7585 (Online), Research Publish Journals, Website: www.researchpublish.co