Exchange Rate Distortion and Economic Growth in Ghana

Gyimah-Brempon, Kwabena; Gyapong, Anthony O.

doi:10.1080/10168739300000014

Cited by 11 publications

(3 citation statements)

References 10 publications

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“…Based on the empirical evidence, Ehinomen and Oladipo (2012) suggested that the government should guide its exchange rate management policy in order to boost exchange rate appreciation and further condense the cost of production in the manufacturing sector that depends heavily on foreign inputs, while there should be simultaneously a total ban on the importation of consumer and intermediate goods that can be or are manufactured locally. Gyimah-Brempon and Gyapong (1993)…”

Section: Literature Reviewmentioning

confidence: 99%

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2019

International Journal of Business, Economics and Management

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The motivation behind this study was to investigate empirically the transitional relationship between economic growth and the exchange rate in Ghana, viz, to what extent and magnitude does the exchange rate affect economic growth? The variables incorporated in the study were interest rate, inflation and direct foreign investment. The statistical results using the Phillips-Perron (PP) test of stationary disclosed that the variables were integrated in order of I(1) and I(0). Johansen cointegration (maximum eigenvalues) established the existence of at least two cointegration vectors and long-run relationships between the variables in the model. The output from the long and short-run estimates revealed the exchange rate to have a robust significant relationship with economic growth. It was recommended that government should embark on rigorous domestic economic transformation (monetary policies, infrastructure repositioning, adequate security etc.) as well as external export promotions to strengthen the economic fundamentals so as to attract foreign investment into the economy. It was also recommended that the Bank of Ghana should pay particular attention to inflation and interest rate volatilities to ensure and embed consumer and producer confidence. Contribution/Originality: This study contributes in the existing literature by illuminating the dynamism and robustness of exchange rate volatilities, and their interlinking causality with economic growth in Ghana. The study employed a new estimation methodology to establish both short and long-run connections between these economic fundamentals and internal economic development.

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Section: Literature Reviewmentioning

confidence: 99%

Untitled

2019

International Journal of Business, Economics and Management

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“…There are a number of studies dealing with multiple exchange‐rate systems, which can have a deleterious effect on economic growth (Bhagwati, 1978; Edwards, 1989) in terms of reduced investment and international trade (Gyimah‐Brempong and Gyapong, 1993), leading to low or negative growth rates in per capita income, exports, and agricultural output (Bagachwa and Naho, 1994; Cottani et al, 1990; Ghura and Grennes 1992; Nkurunziza, 2002). In the presence of exchange‐rate distortion, the use of nominal exchange rates for international comparisons introduces bias into economic calculations and analyses (Bojnec et al, 1997), causes misallocation of foreign exchange reserves, and can lead to ambiguous policy effects.…”

Section: Introductionmentioning

confidence: 99%

“…In the presence of exchange‐rate distortion, the use of nominal exchange rates for international comparisons introduces bias into economic calculations and analyses (Bojnec et al, 1997), causes misallocation of foreign exchange reserves, and can lead to ambiguous policy effects. Considering that most of the poor in less developed countries (LDCs) are in rural areas, where the agricultural sector has been penalized by currency controls (Ellis, 1992), the removal of exchange‐rate distortions should help both economic efficiency and social welfare by improving producer incentives (Husain, 2001), and enhance the growth prospects of LDCs (Gyimah‐Brempong and Gyapong, 1993).…”

Section: Introductionmentioning

confidence: 99%

Social welfare effects of removing multiple exchange rates: evidence from the rice trade in Iran

Bakhshoodeh¹,

Thomson²

2006

Agricultural Economics

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In order to encourage the involvement of the private sector in importing rice, the Iranian government plans to relax the system of multiple foreign exchange rates applied to importers wishing to supply the domestic market. In this article, the welfare effects of removing the current controls on the rice trade, and a domestic rice coupon program, are evaluated by applying a partial equilibrium analysis to 1961-1999 data. The results show that, as far as foreign exchange is concerned, liberalization of the rice market causes an increase in rice imports, mainly due to a decrease in domestic supply. In welfare terms, the loss in producer surplus from rice market liberalization is relatively high, but most rice consumers, and the Iranian taxpayer, would gain. Overall, gains to consumers and taxpayers are estimated to be higher than the losses incurred by domestic suppliers, and therefore net social welfare at national level can be improved by rice market liberalization in Iran. Issues for further discussion include residual food security roles for the state, and supply-side adjustments in terms of resource use and higher-quality production. Copyright 2006 International Association of Agricultural Economics.

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Exchange Rate Volatility and Economic Activities of Africa's Sub-Groups

Adewuyi

Akpokodje²

2013

The International Trade Journal

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Exchange Rate Distortion and Economic Growth in Ghana

Cited by 11 publications

References 10 publications

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Social welfare effects of removing multiple exchange rates: evidence from the rice trade in Iran

Exchange Rate Volatility and Economic Activities of Africa's Sub-Groups

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