Sanusi, Aliyu Rafindadi (2010): Exchange rate pass-through to consumer prices in Ghana: Evidence from structural vector auto-regression. Published in: The West African Journal of Monetary and Economic Integration , Vol. 10, No. 1 (July 2010): pp. 25-54.
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This paper develops a Structural Vector Autoregression (SVAR) model for the Ghanaian economy to estimate the pass-through effects of exchange rate changes to consumer prices. The model incorporates the special features of the Ghanaian economy, especially its dependence on foreign aid and primary commodity exports for foreign exchange earnings. The findings show that the pass-through to consumer prices, although incomplete, is substantially large. This suggests that exchange rate depreciation is a potentially important source of inflation in Ghana. Using variance decomposition analyses, it is found that monetary expansion has been more important in explaining Ghana’s actual inflationary process than the exchange rate depreciation. One policy implication of these findings is that policies that aim at lowering inflation must focus on monetary and exchange rate stability.
|Item Type:||MPRA Paper|
|Original Title:||Exchange rate pass-through to consumer prices in Ghana: Evidence from structural vector auto-regression|
|Keywords:||Exchange Rate Pass-Through, Inflation, Structural Vector-Autoregression, Foreign Aid, Ghana|
|Subjects:||E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level; Inflation; Deflation
F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics
F - International Economics > F3 - International Finance > F31 - Foreign Exchange
|Depositing User:||Aliyu Rafindadi Sanusi|
|Date Deposited:||14. Mar 2011 09:10|
|Last Modified:||16. Feb 2013 08:13|
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