Exchange Rate Pass-Through in Ghana

Frimpong, Siaw; Adam, Anokye M.

doi:10.5539/ibr.v3n2p186

Cited by 27 publications

(27 citation statements)

References 13 publications

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“…The IRFs showed that an exchange rate appreciation led to a fall in consumer prices, albeit the impact is not unitary. Findings corroborates the literature (see (Acheampong, 2004;Frimpong and Adam, 2010;Sanusi, 2010;Loloh, 2014;Adu et al, 2015)).…”

Section: Introductionsupporting

confidence: 91%

An Agnostic Analysis of Exchange Rate Movement in Ghana

Asafo

Matuka

2020

The Economics and Finance Letters

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Based on quarterly data for the period 2006:3-2018:4, the effect of exchange movement on a set of price indices in Ghana is examined via a Bayesian Vector Autoregressive model. Using normal inverted-Wishart priors, the posterior estimates are generated by Markov Chain Monte Carlo draws via a sign restriction algorithm. Findings showed that the response of consumer prices (CPI), producer prices (PPI) and non-food prices (NFP) to exchange rate shocks is low and incomplete. Furthermore, the forecast error variance decomposition (FEVD) indicated that CPI is most responsive to exchange rate impulses than NFP and PPI. In addition, inflationary pressures in Ghana emanated from exchange rate sources other than monetary sources. The paper recommends "pricing in local currency" as a deliberate policy to insulate domestic prices from volatilities in the exchange rate. Contribution/Originality: This study used a new estimation methodology to examine the effect of exchange rate dynamics on prices in Ghana.

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Section: Introductionsupporting

confidence: 91%

An Agnostic Analysis of Exchange Rate Movement in Ghana

Asafo

Matuka

2020

The Economics and Finance Letters

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“…The author revealed that ERPT was lower in countries with low inflation levels, especially in the CFA franc zone and the common monetary area (CMA) than others. Another study, by Frimpong and Adam (2010), examined the ERPT to Ghanaian consumer prices with a VAR model on monthly data over 1990M1-2009M2 periods. They concluded that there was a declining and incomplete ERPT to prices, which was significant in the short term.…”

Section: Empirical Reviewmentioning

confidence: 99%

Asymmetry in Exchange Rate Pass-Through to Consumer Prices: New Perspective from Sub-Saharan African Countries

et al. 2019

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This paper examines the asymmetrical relationship between exchange rate and consumer prices in 40 sub-Saharan African (SSA) countries from 1990Q1 to 2017Q4. We estimate the exchange rate pass-through (ERPT) to consumer prices for each country by using the nonlinear autoregressive distributed lag (NARDL) framework and dynamic panel techniques robust to cross-sectional dependence. First, our findings suggest an asymmetrical ERPT in the SSA region during the short term, whereas there are mixed results across subregions in the long term. Second, the results of the panel analysis suggest incomplete and significant ERPT to consumer prices in the entire SSA region, which is higher during depreciation of the local currency than after appreciation in the short-term, especially in the CFA Franc zone. Third, we find nonlinear ERPT with respect to the size of the exchange rate. Finally, we find that pass-through is higher in countries with fixed exchange rate regimes (CFA franc zone) in a low inflationary environment than in countries with floating exchange rate regimes and high inflation levels. Pass-through is greater during large exchange rate changes than after small changes. Therefore, the policy implication is to consider these asymmetries and nonlinearities to improve monetary policy’s credibility, enhance trade liberalization, and promote competitive market structures in the SSA region.

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“…Recent studies on the pass-through are those of Liu and Tsang (2008), Frimpong and Adam (2010), Devereux and Yetman (2010), and Coulibaly and Kempf (2010). Liu and Tsang in their study found that Hong Kong ERPT to import prices are relatively high compared to those of average OECD countries.…”

Section: Introductionmentioning

confidence: 99%

Structural Breaks and Bilateral Exchange Rate Pass-Through: An Empirical Case of Indonesia–united States

Arintoko

2011

JEP

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This study estimates the exchange rate pass-through into domestic prices in Abstrak: Penelitian ini mengestimasi pass-through kurs ke dalam harga-harga domestik di Indonesia dalam dua tahap pendekatan. Perhatian utama penelitian ini, pertama pada passthrough kurs ke dalam harga-harga impor dan kedua pada pass-through kurs ke dalam hargaharga konsumen, dengan menggunakan model kointegrasi dan error-correction mechanism (ECM). Penelitian ini menggunakan teknik Zivot-Andrews untuk menguji structural breaks dan model-model Gregory

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Exchange Rate Pass-Through in Ghana

Cited by 27 publications

References 13 publications

An Agnostic Analysis of Exchange Rate Movement in Ghana

An Agnostic Analysis of Exchange Rate Movement in Ghana

Asymmetry in Exchange Rate Pass-Through to Consumer Prices: New Perspective from Sub-Saharan African Countries

Structural Breaks and Bilateral Exchange Rate Pass-Through: An Empirical Case of Indonesia–united States

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