Abstract:
Inflation Targeting (IT) Strategy has been adopted widely by both developing and developed countries as a tool of monetary policy. Bank of Ghana (BoG) formally adopted Inflation targeting Policy in 2007, making Ghana the second sub Saharan African country to do so. This study sought to analyze empirically the effectiveness of IT policy on Exchange Rate, Exports and Imports by employing annual time series data from 1984 - 2019. The dataset was divided into periods before the adoption of IT (1984 – 2006) and after Inflation Targeting (2007 – 2019) in order to analyze the effect of IT on the selected variables. A dummy variable capturing the periods before and after the adoption of IT was employed. This study used Vector Autoregressive model to analyze the time series data on Exchange Rate, Exports and Imports. The results indicate that IT has a negative and statistically significant effect on Exchange rate. Also, the results show that Inflation Targeting has a positive but statistically insignificant effect on export in Ghana. Finally, the results revealed that Inflation Targeting has a negative but statistically insignificant effect on imports. The study therefore recommends that Bank of Ghana adopts policy measures towards stabilization of the exchange rates so that level of imports can be controlled and exports encouraged. Also, the study recommends that government implement policies that are directed towards the patronization of
locally produced goods so as to improve our trade balance.
Description:
A thesis in the Department of Economics Education,
Faculty of Social Sciences, submitted to the School of
Graduate Studies in partial fulfilment
of the requirements for the award of the degree of
Master of Philosophy
(Economics)
in the University of Education, Winneba
DECEMBER, 2020
University of Education,Winneba http://ir.uew.edu.