THE IMPACT OF INFLATION ON SOME MACROECONOMICS INDICATORS IN SUDAN DURING THE PERIOD (1990 – 2018)

THE IMPACT OF INFLATION ON SOME
MACROECONOMICS INDICATORS IN SUDAN
DURING THE PERIOD (1990 – 2018)
Ali E.M. Nour Zaroog1; M.K. A.Mohammed2 and O.E.M.Nasir3
1. Associate Professor in Economics Department - University of Bakht-erruda.
2. Assistant Professor in Econometrics and Social Statistic Department -
University of Bakht-erruda.
3. Assistant Professor in Econometrics and Social Statistic Department -
University of Bakht-erruda.
Key Words: Inflation, Money Supply, Exchange Rate, Economic
Growth, and Unemployment.
ABSTRACT:
The study aimed to examine the effect of inflation on some
macroeconomics indicators in Sudan during the period (1990-2018). By
focusing on the most important macro variables (money supply,
exchange rate, and economic growth). The most important assumptions
of the study is that there is an inverse relationship between inflation and
the growth rate of the Sudanese economy represented in the gross
domestic product, and positive relationship between the money supply
and the deterioration of the exchange rate level. The study used the
descriptive, statistical, and econometric method MANAVO over the
SPSS program. The most important results proved the study hypotheses,
that there is a positive relationship between inflation, money supply and
exchange rate deterioration, and an inverse relationship with GDP in
Sudan. The study recommended the necessity of adopting
macroeconomic policies concerned with the productive sectors in order
to combat the continuous rise in prices and improve the level of the
exchange rate in Sudan.
1. INTRODUCTION:
High and sustained economic growth with low inflation is the
central objective of the macroeconomic policy makers. Therefore,
inflation has been one of the most researched topics in macroeconomics
for the last many years because it has serious implications for growth and
income distribution (Mohammed, et al., 2011). The argument of
inflation hinges on two premises: in times of fixed nominal interest rates,
higher inflation expectations decrease real interest rates (see Fisher
equation), and lower real interest rates reduce savings and stimulate
consumption (see Euler equation). However, the effect of real interest
rates on consumption depends on assumptions regarding preferences. In
addition, households use paper money as a medium of exchange. Higher
inflation is an implicit tax on paper money, and could lower economic
activity. Higher inflation might also increase inflation uncertainty, and
Egypt. J. of Appl. Sci., 36 (3) 2021 63-80
reduce consumption spending via a precautionary savings channel
(Francesco, et al., 2015). Price stability is considered as the key variable
to promote economic growth as well as sustainable development. The
major objective for many central banks is to maintain price stability with
high growth rates. As money loses its value people lose confidence in it
as a medium of exchange. The resulting effect is a fall in savings and
consequently lower investment as well as economic growth (Tutoru,
2009). Inflation was the result of weak economic and financial policies,
including considerable financial (monetary and fiscal) expansion, severe
import compression, extensive price and wage controls, rationing, high
subsidies, and constraints on the private sector. These policies resulted in
a large and active parallel market for goods and services and foreign
exchange, and a surge of inflation which averaged 40 percent in the first
half of the 80s only to accelerate thereafter, reaching 130 percent in 1991
and 140 percent in 1992 in Sudan. Sudan annual inflation climbed to
record a high of 166.8 in August 2020. Main pressure came from food
and fuel prices, aggravated by months-long Corona virus lockdown
measures. Inflation has been rising in recent years amid persistent
shortage of bread, beverages and fuel, as black market for US dollars.
This study tried to aimed to examine the effect of inflation on some
macroeconomics indicators in Sudan during the period (1990-2018).
2. Problem Statement:
Much of the empirical literature looks for a negative influence of
inflation on macroeconomics variables. Inflation reduces the purchasing
power of each unit of currency because it leads to increase in prices.
Increase in inflation rates indicates an accelerating deterioration in
economics activities and sectoral production. It leads to lower levels of
investment, economic growth and impact the balance of payments by
making its exports relatively more costly. Moreover, inflation can
interact with the tax system to disturb borrowing and lending decisions.
3.Objectives Of the Study:
The study depends on the following objectives:
1. To examine the impact and relationships of inflation on GDP
growth, money supply, and exchange rate in Sudan.
2. To explore the GDP growth performance and the historical
trends of inflation in Sudan.
3. To study the polices implications that have been applied in Sudan
during the period of study.
4. Hypothesis of the Study:
The hypothesis that pinned this study is that:
1. Inflation is negatively related to economic growth in Sudan.
2. There has been a positive relationship between inflation rate and
the deterioration in exchange rate in Sudan.
64 Egypt. J. of Appl. Sci., 36 (3) 2021
3. The inflation rate related positively to money supply in Sudan.
5. Methodology and Data Collection:
GARCH-M estimation technique has been used in this study to
estimate the model, whereas the sources of data were primarily based on
secondary data for the period (1980-2018). The methodology and
variables for the study have been selected the relative importance on
theoretical and empirical basis. It is also attempted to include the
variables which mostly determine the level and rate of economic growth
in Sudan. Annual time series data for this study have been collected from
the Ministry of Finance and Economic Planning Scurvies and Bank of
Sudan reports for the period 1980-2018.
6. Literature Reviews:
Most of economists use the background of the civil war in Sudan to
analyze the Sudanese economic decline in the last three decades. But a
little focus upon the situation can shows that the civil war was not the
main reason of the decline, as although it may be considered as one of the
decline factors, but the real reason is the economic policies of the
Sudanese governments which were assumed to be the principles director
of the economic regulations (Almosharaf and Fung, 2014).
Khan and Senhadji (2001), examine the effects of inflation on
growth separately for industrial and developing countries. The data set
covers 140 countries from both groups and non-linear least squares
(NLLS) and conditional least squares methods are used. The empirical
results verify the existence of a threshold beyond which inflation exerts a
negative effect on growth. Significant thresholds at 1-3 percent and 11-12
percent inflation levels for industrialized and developing countries have
been found. The view of low inflation for sustainable growth is strongly
supported by the study.
The negative effects of inflation have been studied in the context of
models of economic growth in which the continuous increase of per
capita income is the outcome of capital accumulation along with
technological progress. The uncertainty associated with high and volatile
unanticipated inflation has been found to be one of the main determinants
of the rate of return on capital and investment (Bruno, Pindyck and
Solimano 1993).
Fisher (1993), has investigated relationship between inflation and
economic growth for 93 countries. He used data set consisting of several
macroeconomic variables including inflation. He has found out that the
inflation negatively affected growth by reducing investment, and by
reducing rate of productivity growth.
Mukoka (2018), examined the impact of inflation on economic
growth in Zimbabwe. The time series yearly data for inflation and
economic growth (GDP) from 1990 to 2017 were used for the study.
Egypt. J. of Appl. Sci., 36 (3) 2021 65
Ordinary Least Squares (OLS) was used to determine the impact of
inflation on Economic growth. There was also evidence of co integration
between the two variables using the Johansen Co integration Test. The
results of the study established no relationship between Inflation and
Gross Domestic Product in Zimbabwe. In this regard the study concluded
that all factors which cause an increase in the general price levels such as
energy (petrol, diesel, gasoline, and paraffin), exchange rates volatility,
increase in money supply, poor agricultural production and so forth,
should be kept on check, with the appropriate policies so as to foster
economic growth.
Kormendi and Meguire (1985), estimated a growth equation with
cross section data and find that the effect of inflation on the growth rate
is negative, although it loses explanatory power when the rate of
investment is also included in the regression.
The negative effects of inflation have been studied in the context of
the models of economic growth (Orphanides and Solow (1990), De
Gregorio (1993) and Roubini and Martín (1995)). The continuous
increase of per capita income is the outcome of capital accumulation and
the continuous improvement in the efficiency with which productive
factors are used.
Michael Sarel (1995), examined the possibility of nonlinear effects
of inflation on economic growth. It finds evidence of a significant
structural break in the function that relates economic growth to inflation.
The break is estimated to occur when the inflation rate is 8 percent.
Below that rate, inflation does not have any effect on growth, or it may
even have a slightly positive effect. When the inflation rate is above 8
percent, however, the estimated effect of inflation on growth rates is
significant, robust and extremely powerful.
According to Francesco, et al., (2015), households that expect an
increase in inflation have an 8% higher reported readiness to spend on
durables compared to other households. This positive cross sectional
association is stronger for more educated, working age, high income, and
urban households. They were documented these novel facts using
German micro data for the period 2000-2013. The German government
unexpectedly announced in November 2005 a three percentage point
increase in value added tax (VAT) effective in 2007. This shock
increased households' inflation expectations during 2006, as well as
actual inflation in 2007.
Martin, et al,. (2011), found a positive relationship between real
exchange rate RER under valuation and economic growth. Different
rationales for this association have been offered, but they all imply that
the mechanisms involved should be stronger in developing countries.
Rodrik (2008) explicitly analyzed and found evidence that the growth
66 Egypt. J. of Appl. Sci., 36 (3) 2021
relationship is more prevalent in developing countries. They were
showed that his finding is very sensitive to the criterion used to divide the
sample between developed and developing countries. They were used
alternative classification criteria and empirical strategies to evaluate the
existence of asymmetries between groups of countries and found that the
effect of currency undervaluation on growth is indeed larger and more
robust for developing economies. However, the relationship between
RER undervaluation and per capita GDP is non monotonic.
Evans and Antwi1, (2013), the main objective of their study was
to investigate the effect that changes in the inflation and interest rates
have on the Gross Domestic Product (GDP) in Ghana for the period
1980-2010. The study employed multiple linear regressions to establish
that there exists a fairly strong positive correlation between GDP, Interest
rate and
Inflation, but Inflation and Interest rate could only explain
movement in GDP by only 44 percent. They were established that, there
existed positive relationship between inflation and GDP and interest rate
is negative. It is recommended among others that the Government
together with the Bank of Ghana should develop and pursue prudent
monetary policies that would aim at reducing and stabilizing both the
micro and macroeconomic indicators such as inflation targeting, interest
rate, so as to boast the growth of the economy.
Mashehdul Islam (2009), considered the relationships between
exchange rate and inflation and between exchange rate and GDP in
Bangladesh. Bangladesh experiences of moving away from a currency
board system to floating regime since 2003 offers a lesson worthy of
attention from the point of view of efficiency of Floating Rate System in
least developed countries like Bangladesh. Floating exchange rate regime
in Bangladesh contrasts with its neighbor’s currency board system.
Experiences in Bangladesh and abroad show that all that a government
needs in this regard is to maintain confidence in the currency, secure
currency's strength and ensure its full convertibility. As long as this is
backed by sufficient reserve of the foreign exchanges and there is firm
political and economic will, adoption of a successful free exchange rate
regime is possible.
Zaroog (2013) attempted to examine the behavioral
macroeconomic functions, and the interactions between macroeconomics
variables and its affect on economic growth and macroeconomics
policies stability for the period 1970-2005. In this study the three stage
least squares used simultaneously as estimation technique for the period
1970-2005. The results of estimated equations showed that, all equations
were statistically significant. Also results showed that there was
instability in Sudan economy during the periods 1979- 81 and 1996-95.
Egypt. J. of Appl. Sci., 36 (3) 2021 67
Also the complex conditions of natural disasters, civil wars, instability of
governance, and the external political and economical pressures
aggravated the Sudan economy situation. Elhussein and Abdalla (2018),
investigated the determinants of exchange rate in Sudan and assess their
impact on its volatility. Their paper used the ARDL model to study the
relationship between the dependent and independent variables. Their
study documented that, the determinant factors of the exchange rate in
Sudan are the balance of trade, gold purchases, money supply, inflation
and foreign reserves. The continuous deterioration and fluctuation in
exchange rate throughout the period under study suggest that the
exchange rate system followed has no impact on the stability of the
exchange rate
7. Sudan Economy Background:
The civil war took place in Sudan casted a negative effect on Sudan
economy over years. It considered as part of the resource curse but it is
not considered as a direct cause of the economic deterioration. There are
many other factors lead to the tragic situation, one of the most important
factors the instability of the political situation over the past fifty years
and inappropriate economic policies in Sudan (Almosharaf and Tian,
2014).
In early 1960s, economic activities controlled by the government,
in 1970s, and mid-1980s economic strategy dominated the development
policy (Ali, 1985). In 1979, Sudan adopted macroeconomic stabilization
and structural adjustment programs recognized by the IMF and the World
Bank. However, the economy continued to decline further during 1978-
84. The annual economic growth rate dropped to 1.7%, and
macroeconomics continued its deterioration. The inflation rate increased
to more than 27%; to indicate the inefficiency of monetary policy
pursued in Sudan. The performance of the economy in 1980s was weak
due to the increased cost of the South Sudan war, which increased the
budget deficit. The external finance and the use of counterpart funds for
foreign aid covered about 60% of the total debt, leading to greater
dependence on foreign aid. Money supply increased as the annual rate of
monetary expansion reached about 40% during 1981-1985 (Hag Elamin
& Elmak, 1997 and Tomader, 2012).
The Sudanese government adopted a number of development plans.
These plans included the Ten Year Plan (1960-1970), the Five Year Plan
(1970-1975), the Amended Five Year Plan (1970-1977), the Six Year
Plan (1977-1982), the first Three Year Public Investment Program (1979-
1982), the second Three Year Public Investment Program (1982-1985),
the Four Year Salvation, Recovery and Development Program (1988-
1992) and the Three Year National Economic Salvation Program (1990-
68 Egypt. J. of Appl. Sci., 36 (3) 2021
1993), and the Comprehensive National Strategy covering the period
(1992-2002), (Abdulrahman, 2013).
The exploitation of oil since 1999 has created a remarkable shift in
the structure of the Sudanese economy, from predominantly reliant on
agriculture for growth and exports, to reliance on the oil sector. Because
of oil Sudan experienced its longest and strongest period of growth since
independence where the size of economy, in terms of its GDP, grown
substantially with real GDP growth rate averaged nearly 8 percent during
the nine year period ending in 2008. The strong economic expansion
generated by oil has, however, been unbalanced as, the inherited regional
inequality and disparity in services provision remains striking while
exports of key products have fallen in large part because of reduced
competitiveness, leading to economic growth and the country remains
having a substantial external debt amounted to about US$43.2 billion in
nominal terms (more than 70 percent of GDP) in 2012 .Although data
gaps are substantial it is believed that the majority of those who are
economically active are involved in the informal economy activities
(United Nations Development Assistance Framework UNDAF, 2009-
2012).
Inflation rates have fallen to very low levels of 8% in 2000, after it
was 166% in 1996, a significant stability had took place in exchange rate,
and the rate of GDP growth returned to rise to reach an average of about
6% during 1997-2000. This situation had made improving and some sort
of relative stability in the Sudanese economy until the year 2008, in spite
of internal political crises that took place in Sudan, the level of external
relations, and Darfur crisis. Due to the budget deficit caused by the loss
of oil revenues on the one hand (2011), the decline in agricultural and
industrial production on the other hand, and because of total reliance on
oil without hiring the proceeds for the benefit of the productive sectors,
the inflation rate started raising until it reach in August 2012, more than
41.6%. The thing which clearly seen in the uncontrollable rising of the
price levels, it also led to a decline equivalent to 45% in the monetary
value, which led to the capital erosion in addition to decline in private
sector investments due to the fears of instability and economic imbalance
(Almosharaf and Tian, 2014).
Gold export by the Republic of Sudan has recently become the
major foreign exchange earner following the secession of the southern
part of the country and the creation of the Republic of South Sudan in
July 2011. With most of the oil fields located in the south, the new state
took more than 75% of the oil production capacity of the former unified
country. However, by 2012, just one year after the secession, Sudan
became Africans' third largest gold producer after South Africa and
Ghana and among the top 15 global gold miners. It is not surprising,
Egypt. J. of Appl. Sci., 36 (3) 2021 69
therefore, that gold export has displaced oil export contributing 33%
average in 2012-2017 (Elbadawi and Kabbashi, 2018).
In nineteen nineties the government announced the economic
liberalization policy during which market mechanism is selected as a tool
for setting exchange rates. During the period 2000-2006 and as a result of
foreign currency inflows associated with Sudan petroleum exports, the
foreign exchange market was unified with a sole exchange rate of 2.6
Sudanese pounds for the dollar. The exchange rate kept on deteriorating
at an accelerating rate throughout the period 2006-2017, from 2.6 to 6.9
US dollars, with many interventions and devaluations of currency by the
central bank. For instance in 2012 the Sudanese pound was devalued by
91% in one step, from 2.67 to 4.42 pounds for the dollar to minimize the
difference between the official and parallel rate. Nevertheless the
problem continues and the difference between the parallel and official
exchange rates continued to escalate to reach 184 percent of the parallel
rate by the end of 2017 (Elhussein and Abdalla, 2018).
Since late 2011, Sudan has observed remarkable decrease in
economic growth, which increased inflation and unemployment rates.
Since then, Sudan underwent economic reforms that favored adopt
stabilization policies. Considering that the ongoing Five Year Economic
Reform Plan (2015-2018) for growth and poverty reduction cannot be
achieved unless stabilized the macroeconomic indicators. Economic
recovery continues to elude Sudan. The absence of proper strategies,
economic reform and lack of fiscal and monetary policies have now
resulted in low levels of per capita income, where a majority of labor
force involved in agricultural activities. Addressing these require
structural transformation to high productivity levels and focusing on
long-term sustainable sources for economic growth and inclusive
development, and move towards agro-processing industries (Elryah,
2016).
At the start of 2018, the economic situation severely worsened due
to a set of economic restructuring reforms to access foreign exchange and
governmental funds as recommended by the International Monetary Fund
(IMF). Among other changes, the government cut wheat and fuel
subsidies and devaluated the Sudanese pound (SDG) several times; from
6.7 SDG/USD to 30 SDG/USD in February 2018, and to 47.5 SDG/USD
in October 2018. Exchange rates on the parallel market, often the only
available trade, rose to 70 SDG/USD in the end of 2018, restricting
foreign trade even further. The shortage of hard currency intensified,
adding to rising inflation rates which reached 72.9% in December 2018, a
severe increase compared to 25% in 2017. In sum, high inflation rates
combined with high external debts, declining national GDP, and the rapid
depreciation of hard currency, decreased the private sector’s and the
70 Egypt. J. of Appl. Sci., 36 (3) 2021
government’s ability to import necessary commodities such as fuel,
wheat and medicines. However, cuts in the security spending are not
under consideration (UNICEF, 2018). The economic crisis not only
increased food and non-food prices sharply but further impacted health
services, economic and agricultural activities across Sudan. At the end of
2018, living costs were at an all-time high, leading to decreased
purchasing power (ACAPS, 2018).
With large imbalances and loose policies, the outlook is alarming
without policy reforms. Absent reforms, the weaknesses in
competitiveness and in the business environment will persist. GDP
growth would then likely remain negative in the near term, with minimal
investment and subdued consumption, while bank fragility will rise. High
inflation, continued exchange rate depreciation, and pervasive shortages
will continue to aggravate social tensions. The fiscal imbalance would
also intensify over the medium term, while the current account deficit
would remain large, raising risks of disorderly adjustment. Downside
risks to the outlook would dominate, albeit with large margins of
uncertainty (IMF, 2018).
8. Analytical Framework and The Results:
First: Data Descriptive Statistic (Curves):
Chart (1)
Looking at the chart (1), it becomes clear that there is a general
trend towards an increase in the money supply, which calls into question
its non staticness, and hence the existence of unity roots. As for the
exchange rate, it witnessed stability in the two years (2003-2004)
according to (the Comprehensive Peace Agreement). Whereas, the value
of the Sudanese pound increased in 2005, due to the implementation of
0
20,000,000
40,000,000
60,000,000
80,000,000
1990 1995 2000 2005 2010 2015
MS
0
40
80
120
160
1990 1995 2000 2005 2010 2015
INF
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
1990 1995 2000 2005 2010 2015
GDP
0
1,000
2,000
3,000
4,000
5,000
6,000
1990 1995 2000 2005 2010 2015
EXCH
Egypt. J. of Appl. Sci., 36 (3) 2021 71
the Comprehensive Peace Agreement with the South, and the increase
continued to (2006-2007), with the intervention of the Central Bank of
Sudan in the market (dealing exchange rates). While the years (2011-
2012) witnessed a sharp decline in the exchange rate as a result of the
loss of oil production and its export revenues due to the secession of the
South. The decline in the value of the Sudanese pound continued until the
year (2017) due to the decrease in productivity, the increase in imports,
the accumulation of external debt, and the budget deficit. Inflation
recorded stability in the period (2003-2005) as a result of the political
stability resulting from the Comprehensive Peace Agreement. Also it
decreased in the period (2006-2009) due to the stability of the Sudanese
pound, the decrease in the growth of the money supply, and the cessation
of military operations. It increased in the period (2010-2017) due to the
loss of oil revenues and the weak of production.
From Table (1): It is noted that the average inflation index is less
than the average of money supply index, and also when comparing the
two mediators, we find that the median of the inflation index is less than
the median of money supply, is smaller than the GDP, and the exchange
rate. It seems that the inflation index is growing greater than the money
supply. The difference was great with comparing the maximum values
of: money supply and the exchange rate was approximately four times of
inflation. The curvature of the inflation index curve is less than the
money supply, GDP, and real exchange rate. The Jarque-Bera value
shows that the exchange rate index is closer to a normal distribution
dependency. Here we accept the null hypothesis and reject the alternative
imposition where the null hypothesis for inflation, money supply, and
GDP has been rejected since it does not follow a normal distribution.
Table (1): Descriptive Statistics for The Data
MS INF GDP EXCH
Mean 14522554 38.32414 79153149 2186.659
Median 3466700. 25.60000 31037068 2305.000
Maximum 77739000 129.2000 4.76E+08 5700.000
Minimum 31645.00 4.800000 110110.7 4.500000
Std. Dev. 21565154 40.23034 1.13E+08 1409.113
Skewness 1.665310 1.282570 2.044680 0.573416
Kurtosis 4.744918 3.118219 6.986235 3.528578
Jarque-Bera 17.08314 7.967658 39.40730 1.926829
Probability 0.000195 0.018614 0.000000 0.381588
Sum 4.21E+08 1111.400 2.30E+09 63413.10
Sum Sq. Dev. 1.30E+16 45317.44 3.59E+17 55596792
Observations 29 29 29 29
Second: Unit Roots Tests:
From Table No. (2): the probability value of inflation, GDP,
exchange rate, and money supply are less than the level of significance
(5%), so the null hypothesis has been rejected and accepted the
72 Egypt. J. of Appl. Sci., 36 (3) 2021
alternative one that; there is no unit root for all variables, and therefore
the series is static at the first difference. For that, it is noticed; the
relationship between the study variables is a logical and not a false one.
Table (2): Dickey Fuller ADF Unit Roots Tests:
Variable ADF Probability ADF Probability ADF Probability Order
Level First Difference 2nd Difference
INF -1.737012 0.4025 -8.335556 0.0000 I(1)
1% -3.689194 -3.699871
5% -2.971853 -2.976263
10% -2.625121 -2.627420
MS -1.972054 0.2967 -5.293079 0.0000 I(1)
1% -3.689194 -3.699871
5% -2.971853 -2.976263
10% -2.625121 -2.627420
GDP 3.564271 1.0000 -5.855874 0.0000 I(1)
1% -3.752946 -3.699871
5% -2.998064 -2.976263
10% -2.638752 -2.627420
EXCH -2.063541 0.2599 -4.751335 0.0000 I(1)
1% -3.689194 -3.699871
5% -2.971853 -2.976263
10% -2.625121 -2.627420
Source: Prepared by the researchers from the product of the annexes.
Third: The Co-integration Test:
The results of the co-integration effect test indicate a rejection of
the null hypothesis of the absence of any co-integration vector at a
significant level (5%), and then acceptance of the alternative hypothesis
that states there are two equations for the co-integration between the
study variables. This indicates that the time series under study are
equilibrium in the long run.
Fourth: Estimating The Model:
At this stage, the model variables will be estimated by applying
MANOVA and linear regression by the SPSS statistical package to
measure the effect of inflation on some macroeconomics indicators in
Sudan during the period (1990-2018). (see Appendix, tables 1, 2, 3, ….,
and 6).
Table No. (3): The Results of The Co-integration Test (Johansson).
Trace test indicates 2 co-integrating eqn(s) at the 0.05 level
* denotes rejection of the hypothesis at the 0.05 level
**MacKinnon-Haug-Michelis (1999) p-values
Unrestricted Co-integration Rank Test (Maximum Eigenvalue)
Hypothesized Max-Eigen 0.05
No. of CE(s) Eigenvalue Statistic Critical Value Prob.**
None * 0.878271 56.86089 27.58434 0.0000
At most 1 * 0.649031 28.27054 21.13162 0.0042
At most 2 0.219252 6.682589 14.26460 0.5273
At most 3 * 0.203484 6.142723 3.841466 0.0132
Egypt. J. of Appl. Sci., 36 (3) 2021 73
Table (4): Summary of The Results of MANOVA and Linear
Regression
Explanatory
Variable
Dependent
Variables
R F T Coefficient 2
Inflation
99999 28.321 1.674 164357.938 Money Supply
99999 174.238 -1.783 -912904.130 GDP
99999 45.228 4.103 21.707 Exchange Rate
S.D
28.321 Money Supply
174.238 GDP
45.228 Exchange Rate
Wilkes Lambda = 10359
Calculated F = 46.611
Source: Prepared by the researchers from the product of Appendix No. (4)
Economic Standard:
From the results in table (4), there is a positive relationship among
inflation rate and (money supply and the improvement in exchange rate)
according to the parameters (164357.94 and 21.71 respectively), and this
is completely compatible with economic theory. Increasing inflation
reduces the value of the Sudanese pound against foreign currencies and
deteriorate exchange rate in Sudan. There is a negative relationship
between the rate of inflation and the gross domestic product (according to
the parameter -912904.13).
Statistical Standard:
The probability value associated with (t) test is significant, and this
indicates that the variables are affected by each other. Table (4) shows
that there are statistically significant differences in the money supply, the
exchange rate, and the GDP due to the effect of the inflation rate. The
value of the value of Wilkes Lambda (10359), which is a function of the
level of significance (0.00). The value of F test (46.611) indicates the
existence of differences in the money supply, GDP and exchange rate
combined when the effect of inflation, the value of the coefficient of
determination R2 (0.99) and this indicates that 99% of the change in the
dependent variables is caused by inflation and 1% are variables did not
included in the model.
Econometrics Standard:
Auto-Correlation Test:
Table (5): Q-Statistic Test
Slowdown Q-Stat Df Prop
0 197.6300 06 99380
3 366.6575 33 99409
Source: Prepared by the researchers from Eviews7.
74 Egypt. J. of Appl. Sci., 36 (3) 2021
From the result in table (5) above, it is noticed that the probability
value of the autocorrelation test is greater than (0.05), and this indicates
that there is no self-correlation problem in the model, which indicates
that there is no self-correlation between errors.
Heteroskedasticity Test:
Table (6): Variance Variation
F-Statistic 9977 Prop 9954
Obs*R-squared 7990 Prop 9953
Source: Researchers preparation using E-views
Table (6) classifies the probability values which are associated with
the two tests F and R2 are (0.54) and (0.52) respectively, greater than
(0.05), indicating that the model does not suffer from the variance
variation problem.
9. The Main Results:
1. There is a positive relationship among inflation rate and (money
supply and the deterioration in exchange rate) in Sudan.
2. There is a negative relationship between the rate of inflation and the
gross domestic product in Sudan.
10. Recommendations:
1. To treat the problem of inflation in Sudan, we need to follow a macro
policies that lead to increased production.
2. Encouraging local and foreign investment towards productive projects.
3. Interest in the agricultural sector as the backbone of the Sudanese
economy.
4. The need to follow urgent monetary and fiscal policies to solve the
problem in money supply and the exchange rate in Sudan.
11. CONCLUSION:
The study tried to exam the impact of inflation rate on Sudanese
economy for the period (1990 – 2018). Inflation hit the Sudanese
economy for a long years since the begging period after the independence
from the British colonialism. There were many causes behind this
problem including civil wars, political instability, drought and
desertification that struck the country for various years, misuse of
resources, and inappropriate macroeconomic policies. The study relied on
some assumptions, the most important of them are that: there is a positive
relationship between inflation, money supply and the exchange rate. And
an inverse relationship between inflation and GDP. The study used the
MANOVA method to analyze the data related to the study through the
SPSS program. The obtained results proved the validity of the study
hypotheses that there is a positive relationship between inflation and the
deterioration of the exchange rate, money supply, and an inverse
Egypt. J. of Appl. Sci., 36 (3) 2021 75
relationship with the GDP. The study recommends the need to follow an
economic policies that can address the problems of the Sudanese
economy, with attention to productive sectors.
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تأثير التضخم عمى بعض مؤش ا رت الاقتصاد الکمي في السودان خلال الفترة
8102 (م. - 0991(
، عمي الحسن محمد نور زروق 0 ، محمد خمف الله أحمد محمد 8
عمر الأمين محمد ناصر 3
1. أستاذ مشارک بقسم الاقتصاد، کمية الاقتصاد والعموم الإدارية، جامعة بخت الرضا.
2. أستاذ مساعد بقسم الاقتصاد القياسي والإحصاء الاجتماعي، کمية الاقتصاد والعموم الإدارية جامعة بخت
الرضا.
3. أستاذ مساعد بقسم الاقتصاد القياسي والإحصاء الاجتماعي، کمية الاقتصاد والعموم الإدارية جامعة بخت
الرضا.
هدفت الد ا رسة إلى فحص أثر التضخم عمى بعض مؤش ا رت الاقتصاد الکمي في السودان
2112 (م. وذلک بالترکيز عمى أهم المتغي ا رت الکمية )عرض النقود، – خلال الفترة ) 1991
وسعر الصرف، ومعدل النمو(. أهم افت ا رضات الد ا رسة أنه توجد علاقة عکسية بين التضخم
ومعدل نمو الاقتصاد السوداني ممثل في الناتج المحمي الإجمالي، وطرية مع عرض النقود
وتدهور مستوى سعر الصرف. استخدمت الد ا رسة المنهج الوصفي، والإحصائي، وطريقة
أهم النتائج أثبتت صحة فروض الد ا رسة .SPSS عبر برنامج MANAVO الاقتصاد القياسي
GDP بأنه توجد علاقة طردية بين التضخم وعرض النقود وتدهور سعر الصرف، وعکسية مع
في السودان. أوصت الد ا رسة بضرورة إتباع سياسات اقتصادية کمية تهتم بالقطاعات الإنتاجية
وذلک لمحاربة ارتفاع الأسعار المستمر وتحسين مستوى سعر الصرف في السودان.
78 Egypt. J. of Appl. Sci., 36 (3) 2021
13. APPENDIX:
Table (1): GDP, Exchange Rate, Money Supply, and Inflation
(Million SD)
Year GDP EXCH MS INF
1990 110110.7 4.500000 31645.00 67.00000
1991 192060.3 15.10000 52696.00 120.4000
1992 421818.0 132.0000 141595.0 119.3000
1993 948466.0 216.0000 268583.0 101.1000
1994 1881289. 315.0000 405353.0 116.8000
1995 5522838. 832.0000 705866.0 69.50000
1996 11194938 1460.000 1166000. 129.2000
1997 18318179 1989.000 1597100. 47.19000
1998 25080913 2520.000 2069500. 17.01000
1999 26301423 2572.300 2579200. 16.16000
2000 31037068 2574.000 3466700. 8.600000
2001 38763329 2584.000 4322100. 4.800000
2002 50204397 2637.000 5632700. 8.400000
2003 56720953 2602.000 7340900. 7.400000
2004 70383228 2586.000 9604500. 8.700000
2005 85105084 2456.000 14031400 8.400000
2006 95396107 2171.000 17871800 7.200000
2007 1.07E+08 2016.000 19714600 8.100000
2008 1.21E+08 2091.000 22933200 14.30000
2009 1.36E+08 2325.000 28314500 11.20000
2010 1.62E+08 2305.000 35497900 13.00000
2011 1.87E+08 2660.000 41853100 18.10000
2012 2.43E+08 3573.000 56663300 35.60000
2013 3.43E+08 4754.000 66445700 25.60000
2014 4.76E+08 5200.000 77739000 25.70000
2015 582937.4 5700.000 93642.60 25.65000
2016 693514.0 1650.900 120800.1 25.67000
2017 823938.0 1672.300 203367.5 25.66000
2018 758726.0 1800.000 287312.1 25.66000
Source: Bank of Sudan Annual Reports Various Years
Table (2): Coefficients a
Model
Unstandardized Coefficients
Standardized
Coefficients t Sig.
B Std. Error Beta
1
(Constant) 20821430.083 5406305.341 3.851 .001
inf 164357.938 98192.484 .307 1.674 069.
a. Dependent Variable: ms
Table (3)
Coefficients a
Model
Unstandardized Coefficients
Standardized
Coefficients t Sig.
B Std. Error Beta
1
(Constant) 114139412.630 28197826.194 4.048 .000
inf -912904.130 512145.432 -.324 -1.783 63.0
a. Dependent Variable: gdp
Egypt. J. of Appl. Sci., 36 (3) 2021 79
Table (4)
Coefficients a
Model
Unstandardized Coefficients
Standardized
Coefficients t Sig.
B Std. Error Beta
1
(Constant) 3018.551 291.273 10.363 .000
inf 21.707 5.290 .620 4.103 .000
a. Dependent Variable: exch
Table (5)
Multivariate Tests a
Effect Value F Hypothesis df Error df Sig.
Intercept
Pillai's Trace 1.000 10673.555b 2.000 1.000 .007
Wilks' Lambda .000 10673.555b 2.000 1.000 .007
Hotelling's Trace 21347.110 10673.555b 2.000 1.000 .007
Roy's Largest Root 21347.110 10673.555b 2.000 1.000 .007
Inf
Pillai's Trace 1.993 22.711 52.000 4.000 .004
Wilks' Lambda .000 47.611b 52.000 2.000 .021
Hotelling's Trace 10359.938 .000 52.000 .000 .
Roy's Largest Root 10210.635 785.433c 26.000 2.000 .001
Table (6)
Tests of Between-Subjects Effects
Source
Dependent
Variable
Type III Sum of Squares Df Mean Square F Sig.
Corrected
Model
Ms 12986292240054090.000a 26 499472778463619.060 28.321 .035
Exch 55572257.725b 26 2137394.528 174.238 .006
Gdp 358092237514832700.000c 26 13772778365955100.000 45.228 .022
Intercept
Ms 6499385731898682.000 1 6499385731898682.000 368.523 .003
Exch 134477312.200 1 134477312.200 10962.462 .000
Gdp 190750300628969984.000 1 190750300628969984.000 626.406 .002
Inf
Ms 12986292240054090.000 26 499472778463618.900 28.321 .035
Exch 55572257.725 26 2137394.528 174.238 .006
Gdp 358092237514832770.000 26 13772778365955100.000 45.228 .022
Error
Ms 35272604192934.580 2 17636302096467.290
Exch 24534.145 2 12267.073
Gdp 609031102838456.500 2 304515551419228.250
Total
Ms 19137797344494480.000 29
Exch 194259593.650 29
Gdp 540392676791332100.000 29
Corrected
Total
Ms 13021564844247030.000 28
Exch 55596791.870 28
Gdp 358701268617671170.000 28
a. R Squared = .997 (Adjusted R Squared = .962)
b. R Squared = 1.000 (Adjusted R Squared = .994)
c. R Squared = .998 (Adjusted R Squared = .976)
80 Egypt. J. of Appl. Sci., 36 (3) 2021