The thesis looks at the relationship between inflation, interest rate, exchange rate and GDP for a developed country (Canada) and a developing country (Ghana). Through a detailed literature search looking at the economies of Ghana and Canada as well as statistical analysis using least squares and regression models the following questions were addressed:
1) What is the impact of inflation on businesses and trade?
2) Most businesses depend on loans to run their business operations. What is the correlation between inflation and interest rate both in Ghana and Canada?
3) How is inflation affecting the exchange rate development of import and export? What is the effect on businesses that depend mostly on imported raw material for production?
4) How is monetary policy used in Canada to control inflation and how does this compare to the policy being used in Ghana?
2 Literature Review
2.1 Inflation Defined
2.2 Measures of Inflation
2.3 Types of Inflation
2.4 Theories of Inflation
2.5 Reasons to Control Inflation
2.6 Methods Used to Control Inflation
2.7 Inflation and Interest Rates
2.8 Exchange Rate (Trade) and Inflation
2.9 Gross Domestic Product (GDP)
2.10 The Relationship Between Inflation and GDP
3 The Economies of Ghana and Canada
3.1 Ghana’s Economy
3.2 Canada’s Economy
3.3 Gross Domestic Product (GDP)
3.4 Interest Rate
4 Inflation Control in Ghana
4.3 HIPC Initiative
4.4 Food and Beverages
4.5 Non –Food Index
4.6 Money Supply
4.7 Government Expenditure
5 Methodology and Estimation
5.3 Limitations of the Models
Source: Blekinge Institute of Technology
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