Empirical analysis of Exchange rate in Ghana
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Date
MAY 2016
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Abstract
The inherent aim of this study was to investigate the factors that influence exchange rate
movements in Ghana. The frequent exchange rate volatility poses a serious challenge to
economic agents in their decision making process. The study covers the period of thirtyfour
years (1980 – 2013). Both primary and secondary data were used in arriving at the
findings of the study. Qualitative and quantitative analysis were done to serve as means
of presenting the findings of the research work. An Augmented Dickey-Fuller unit root
test was conducted after which the ARDL cointegration analysis was performed. Other
approaches adopted were the Granger causality test, impulse response, and variance
decomposition. The findings indicates that imports, public debt, nominal GDP, and
inflation affect exchange rate movement in the Ghanaian economy. Also, exchange rate
depreciation was found to have significant impacts on the economy as it can trigger
inflation, worsening the external debt position of government, and deteriorating the
nation’s trade balance. As ways of tackling the depreciation of the Cedi and mitigating
the attendant adverse repercussion on the Ghanaian economy, creation of imports
substitutes and appropriate utilization of borrowed funds by government appear to be
vibrant measures.
Description
A thesis submitted to the Department of Economics, Kwame
Nkrumah University of Science and Technology in partial
fulfilment of the requirements for the award of Master of
Science (Economics),