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Trade Openness and Monetary Policy in Ghana

Author

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  • Ferdinand Ahiakpor
  • William Cantah
  • William Brafu-Insaidoo
  • Eric Bondzie

Abstract

The study employed a Structural VAR model, using monthly time series data from 2002 to 2017 to assess the relationship between trade openness and effectiveness of monetary policy in Ghana. The empirical results revealed that as the degree of trade openness increases, monetary policy becomes more effective in reducing the rate of inflation. However, monetary policy is less effective to reduce the output gap. Therefore, the results suggest that monetary policy authorities must take into account the level of trade openness whenever they are formulating monetary policy.

Suggested Citation

  • Ferdinand Ahiakpor & William Cantah & William Brafu-Insaidoo & Eric Bondzie, 2019. "Trade Openness and Monetary Policy in Ghana," International Economic Journal, Taylor & Francis Journals, vol. 33(2), pages 332-349, April.
    • Handle: RePEc:taf:intecj:v:33:y:2019:i:2:p:332-349
    DOI: 10.1080/10168737.2019.1610027
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