Oil Windfalls in Ghana
AbstractWe use a calibrated multi-sector DSGE model to analyze the likely impact of oil windfalls on the Ghanaian economy, under alternative fiscal and monetary policy responses. We distinguish between the short-run impact, associated with demand-related pressures, and the medium run impact on competitiveness and growth. The impact on inflation and the real exchange rate could be moderate, especially if the fiscal authorities smooth oil-related spending or increase public spendingâ€™s import content. However, a policy mix that results in both a fiscal expansion and the simultaneous accumulation of the foreign currency proceeds from oil as international reservesâ€”to offset the real appreciationâ€”would raise demand pressures and crowd-out the private sector. In the medium term, the negative impact on competitivenessâ€”resulting from â€Dutch Diseaseâ€ effectsâ€”could be small, provided public spending increases the stock of productive public capital. These findings highlight the role of different policy responses, and their interaction, for the macroeconomic impact of oil proceeds.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 10/116.
Date of creation: 01 May 2010
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This paper has been announced in the following NEP Reports:
- NEP-AFR-2010-05-29 (Africa)
- NEP-ALL-2010-05-29 (All new papers)
- NEP-DGE-2010-05-29 (Dynamic General Equilibrium)
- NEP-ENE-2010-05-29 (Energy Economics)
- NEP-FDG-2010-05-29 (Financial Development & Growth)
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- Fadia Al Hajj & Gilles Dufrénot, & Kimiko Sugimoto & Romain Wolf, 2013. "Reactions to Shocks and Monetary Policy Regimes: Inflation Targeting Versus Flexible Currency Board in Ghana, South Africa and the WAEMU," William Davidson Institute Working Papers Series wp1062, William Davidson Institute at the University of Michigan.
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