  The study investigates the effects of crude oil prices on inflation and
interest rate in Ghana using data obtained from Bank of Ghana data repository.
The Augmented Dickey-Fuller and the Phillips-Perron tests were used to test the
presence or otherwise of unit root relationship among the variables. The
stationarity test showed that the variables are either integrated of order one
or integrated of order zero. Autoregressive distributed lag bounds test
approach was adopted to examine cointegration among the variables. The results
showed a positive relationship between crude oil prices and inflation in the
long-run. The short-run show the coefficient of the first period lag value of
inflation is negative, but statistically insignificant in the short-run.
However, the second period lag value of inflation is positive and significant.
The result also shows negative relationship between crude oil price and
interest rate. Based on the findings, it is recommended that the government of
Ghana should provide and strengthen the efficiency of the public transport
system to help reduce transport fares in order to shield the poor from the
implications of oil price increases in Ghana.
