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Abstract:
This paper investigates the relationship between inflation, money, velocity of money and economic growth in Botswana. Quarterly data from 2007 to the last quarter of 2016 was analyzed using multiple regression analysis on Statistical Package for the Social Sciences (SPSS). Inflation was the dependent variable and money supply, velocity of money and GDP were independent variables. The regression results show that a positive and significant relationship exists between GDP and inflation, and that a negative and significant relationship exists between Money supply and inflation in Botswana, In addition, there is a negative relationship between velocity of money and inflation. Overall, although the variables do no hold the hypothesized signs, this study concludes that inflation in Botswana is influenced by economic growth, money supply and velocity of money which are all found to be statistically significant. Therefore appropriate policies must be taken by policy makers and relevant authorities to control money supply in order to have a low, stable, and predictable level of inflation in the country.
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