Monetary Factors and Inflation in Kenya: Comparative Aggregated and Disaggregated Econometric Analysis
Evans Ovamba Kiganda *
Department of Economics, Kaimosi Friends University College (KAFUCO), Kenya.
Margaret Atieno Omondi
Department of Finance and Accounting, Kaimosi Friends University College (KAFUCO), Kenya.
*Author to whom correspondence should be addressed.
Abstract
Aim: This study aimed to analyze the influence of monetary factors on inflation in Kenya.
Study Design: Correlational research design was employed to analyze the relationship between inflation and monetary factors in Kenya.
Methodology: Monthly time series data from Central Bank of Kenya spanning from 2005 to 2018 was used for analysis using Variance decomposition, impulse response and Granger causality techniques.
Results: Results indicated that total money supply had a positive influence on inflation that was highly influenced by extended broad money.
Conclusion: The study concluded that imports influence inflation in Kenya but commercial imports highly determined total imports influence on inflation in Kenya.
Keywords: Monetary factors, inflation, Kenya.