Monetary variables are not only important for the attainment of stable inflation but also for exercising influences in various ways on the behavior of the real economy, including the level of investment activity. Investment is very crucial in improving a country’s productivity and growth and increasing its competitiveness in the long run. The study aims to investigate how monetary variables such as lending rates, exchange rate, and money supply affect investment actions in some selected Sub-Saharan African countries in the period 1980–2018. Using the panel autoregressive distributive lag method in the long run, a negative and significant relationship between lending rates and investment was discovered. Also, investment is positively related to both money supply and exchange rate in the long run. It is recommended that when central banks take contractionary measures, they must always consider the resulting change in investment as it is an essential part of aggregate demand. In a sluggish economy, interest rates should not be raised to the point where investment is discouraged and assets are suppressed.
Part of the book: Linear and Non-Linear Financial Econometrics