Ghana’s Reserves and Currency Volatility: A Comparison with Empirical Theories
Journal Title: International Journal of Academic Research in Business and Social Sciences - Year 2018, Vol 8, Issue 1
Abstract
This paper uses a VEC model to assess the relationships between macroeconomic variables and how they conform to empirical theories of an open economy in literature. We assess the reserve policy of Ghana, and the effect of exchange rates on exports. We also examined the effects of foreign direct investments on the volatility of the exchange rates, and the ability of the central bank to roll on bail outs in times of financial turmoil. We found an increase in exports during episodes of currency appreciation in both time periods, and also, the increase in FDIs led to depreciation of the currency. We again found that, Ghana’s reserves policy is not a planned intervention, and mostly depends on occasional large inflows. This is consistent with the findings of the IMF staff as stipulated in the article iv consultation report (2017). We also found positive correlation between reserves and the financial sector. This is in conformity with the empirical works of Lane and Burke (2001) and also Obstfeld et al., (2010). However, we could not confirm the findings in Greenspan (1999) and Bussiere et al., (2015) of short term debts been the most important metric for international reserves neither did we find evidence that reserves accumulation is associated with depreciating currencies in developing economies
Authors and Affiliations
Yao Hongxing, Abdul Rashid Abdul Rahaman
Keywords
Related Articles
- EP ID EP530265
- DOI 10.6007/IJARBSS/v8-i1/3788
- Views 75
- Downloads 0
Human Capital Development Programmes and their Effect on the Job Satisfaction of Workers in Zimbabwe Urban Municipalities: The Case of Chinhoyi
The aim of this study is to establish the impact of human capital development on the job satisfaction of Chinhoyi Municipality workers. The independent variables are training and development, performance appraisal, salar...
Moderating Effect of ICT on Supply Chain Financial Flow Risk and Performance of Manufacturing Firms in Kenya
The manufacturing firms in Kenya contribute greatly to the economic development of the country. Developments in ICT are creating possibilities for moderating risks along the supply chain by creating platforms for effecti...
Community-Based Learning Center of Renewable Energy Sources for Indigenous Education
Renewable energy based Community Learning Center (CLC) has an impact in the indigenous people’s education development, especially those in remote areas. The aim of the program is to provide electricity in order to access...
“Social Corporation” The Sharia Business Entity Model: A Corporate Structure with Embodied CSR
Corporate social responsibility has been widely and internationally accepted as an element of good governance and one of the key factors in sustainability of a business. Nonetheless, the inculcation and practices of CSR...
Credit Risk Management: Exploring Current Practices and Important Elements in Business Financing Decisions
The aim of the study is to explore the current practices and important elements in business financing decisions. To achieve this aim of the study, the study conduct in-depth interviews with selected business financing of...