Abstract:
Abstract
The development of time series model for analysis has seen a major patronage in recent times. This can mainly
be attributed to the precision that is associated with these models and hence its dependence in the field of
finance, statistics and economics. The theory of Generalized Autoregressive Conditional Heteroscedasticity
(GARCH) was explored and monthly interest rate of Ghana from 2003:01 to 2013:12 was applied. The results
shows that the best GARCH model to adequately capture the volatility in interest rest is the GARCH (1, 2). The
estimated model was used to forecast interest rate for a year in Ghana and the result shows that interest rate is
predicted not to hit above 30% by the end of 2014.
