Inflation and Gross Domestic Product (Gdp) in Uganda (1984w 2014)

ABSTRACT This research investigated the effect of inflation rate on gross domestic product (GDP) in Uganda during the period of 1984-2014 by using Correlation and Linear regression analysis to analyse and interpret the findings of data. The rate of gross domestic product was falling for the last four years in Uganda (UBO5).The researcher obtained yearly collected data of the two variables under this study from the Bank of Uganda website, Uganda bureau of statistics and World Bank. The researcher found that the trend of Inflation rate was not stable and kept changing from tirtie to time while the government did a lot of efforts to solve and did something good, while the trend of GDP growth rate was falling down little bit from time to time. The researcher found negative and insignificant relationship between inflation rate and GDP growth rate for Uganda from 1984 -2014, The coefficient of determination (R2) is 0.043 implied that only 4.3% of the variations in economic growth (GDP) have been explained by inflation and about 95.7% was captured by other factors which have substantial influence on GDP but were excluded from the model . This regression analysis agrees with the correlation analysis that the Pearson’s correlation coefficient(r=-0.274) implying that there is a negative relationship between inflation rate and GDP growth rate in Uganda. The coefficient of determination (r2=0.075), shows that changes in inflation rate reduces GDP growth rate by just 7.5% and 92.5% of other factors reduces and affects GDP growth rate. These findings are also in line with many of the literature review. Results also indicate that in developing countries like Uganda there are other factors that explain GDP growth rate than inflation and therefore to study GDP in developing countries, there is need to employ more factors other than inflation alone. These results have important policy implications. Moderate inflation is helpful to growth, thus Uganda should ensure that its inflation doesn’t move to a double digit but should evolve on moderate inflation rate 

TABLE OF CONTENTS

DECLARATION

APPROVAL ii

DEDICATION iii

ACKNOWLEDGEMENTS IV

LIST OF TABLES v

LIST OF FIGURES vi

ABSTRACT x

CHAPTERONE 1

INTRODUCTION 1

1.0 introduction 1

1.1 Background 1

1.1.2. Theoretical perspective 5

1.1.3. Conceptual Perspective 6

1.1.4. Contextual Perspective 7

1.2. Statement of the problems 8

1.3. Purpose of the study 10

1.4. Research objectives 10

1.4.1. Specific objectives 10

1.5. Research questions 10

1.6. Null hypothesis 11

1.7. Scope of the study 11

1.8. Significance of the study 11

1.9. Operational definitions of the key terms 12

CHAPTER TWO .12

LITERATURE REVIEW 13

2.0. Introduction 13

2.1. Theoretical review

2.2, Conceptual review 14

2.1.1. Gross domestic product (GDP) 14

2.3. Empirical review 16

2.3.1. Empirical findings of gross domestic product (GD) 16

2.3.3. Empirical findings of the relationship between inflation and gross domestic

product (GDP) 21

2.3.4. Research Gap 29

CHAPTER THREE 31

METHODOLOGY 31

3.0 Introduction 31

3.1 Research design 31

3.2 Data collection techniques 31

3.3. Data analysis 31

3.4. Data type and source 33

3.5. Ethical consideration 33

3.6. Limitations of the study 33

CHAPTER FIVE 43

DISCUSSIONS CONCLUSION AND RECOMMENDATIONS 43

5.1. Introduction 43

5.2.0. To determine the trend of Inflation 43

5.3.0. To determine the trends of GDP 44

5.4.0. To determine the relationship between Inflation and GDP growth rates 44

5.5. Conclusion .46

5~6. Recommendations .46

APPENDCIES 51

APPENDIX I: TRANSMITAL LETTER FOR THE ORGANIZATIONS.................................... 51

APPENDIX II: RESEARCHER’S CURUCULUM VITAE 52

APPENDX III: TIME FRAME 53

APPENDIX IV ESTIMATED BUDGET 54