This paper investigated the symmetric and asymmetric impact of international reserves (FCR) and money supply (M2) on inflation in The Gambia. The paper employed the Nonlinear-ARDL (NARDL) for the asymmetric and the ARDL for the symmetric effect, using monthly data (2005M12019M12). The NARDL revealed that a positive shock in foreign reserves is detrimental to inflation, while a negative shock promotes price stability. Similarly, an increase in money supply triggers price instability, while a decline in M2 was found to have a neutral effect. The ARDL results showed that FCR positively affects inflation in the long term but negatively in the short run. However, M2 has a positive relationship with inflation both in the short and long run. The findings indicate that policymakers in The Gambia are faced with a trade-off of either accumulating reserves to protect the economy against external shocks or maintaining price stability.

Title

المجلة الأفروآسيوية للتمويل والمحاسبة

Publisher

ماليزيا

Publisher Country

Malaysia

Indexing

Scopus

Impact Factor

2.0

Publication Type

Online only

Volume

10

Year

2023

Pages

20