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Monetary Policy and Financial Sector Reform For Employment Creation and Poverty Reduction in Ghana

Author

Listed:
  • James Heintz
  • Gerald Epstein

Abstract

This report summarizes the findings of a UNDP-sponsored study on the structure of the financial sector, central bank policy, and employment outcomes in Ghana. The financial sector is the primary conduit through which monetary policy affects real economic outcomes, and monetary policy determines the resources available to financial institutions. Therefore, monetary policy must be coordinated with financial sector reforms in order to improve employment opportunities, reduce poverty and support human development. The report develops a critique of financial programming and inflation targeting, presents a series of empirical estimates on the impact of monetary policy variables in Ghana, and describes the elements of an alternative monetary policy. In addition, the report documents the institutional and structural constraints currently operating in the financial system which prevent the sector from facilitating investment, growth, and improved employment opportunities. Econometric estimates of the determinants of investment explicitly link financial variables to real economic activity. The report summarizes a series of financial sector reforms that would improve the financial sector's capacity to move Ghana onto an employment-intensive growth path.

Suggested Citation

  • James Heintz & Gerald Epstein, 2006. "Monetary Policy and Financial Sector Reform For Employment Creation and Poverty Reduction in Ghana," Working Papers wp113, Political Economy Research Institute, University of Massachusetts at Amherst.
  • Handle: RePEc:uma:periwp:wp113
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    File URL: https://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_101-150/WP113.pdf
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    References listed on IDEAS

    as
    1. Chirinko, Robert S, 1993. "Business Fixed Investment Spending: Modeling Strategies, Empirical Results, and Policy Implications," Journal of Economic Literature, American Economic Association, vol. 31(4), pages 1875-1911, December.
    2. Gerald Epstein, 2003. "Alternatives to Inflation Targeting Monetary Policy for Stable and Egalitarian Growth: A Brief Research Summary," Working Papers wp62, Political Economy Research Institute, University of Massachusetts at Amherst.
    3. Mario I. Blejer & Alfredo M. Leone & Pau Rabanal & Gerd Schwartz, 2002. "Inflation Targeting in the Context of IMF-Supported Adjustment Programs," IMF Staff Papers, Palgrave Macmillan, vol. 49(3), pages 1-2.
    4. International Monetary Fund, 2004. "Ghana; Poverty Reduction Strategy Paper Annual Progress Report," IMF Staff Country Reports 04/207, International Monetary Fund.
    5. Aryeetey, Ernest & Udry, Christopher, 1997. "The Characteristics of Informal Financial Markets in Sub-Saharan Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 6(1), pages 161-203, March.
    6. Harrison, Ann, 1996. "Openness and growth: A time-series, cross-country analysis for developing countries," Journal of Development Economics, Elsevier, vol. 48(2), pages 419-447, March.
    7. Laurence Ball, 1994. "What Determines the Sacrifice Ratio?," NBER Chapters,in: Monetary Policy, pages 155-193 National Bureau of Economic Research, Inc.
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    9. James Heintz, 2005. "Employment, Poverty, and Gender in Ghana," Working Papers wp92, Political Economy Research Institute, University of Massachusetts at Amherst.
    10. Easterly, William, 2006. "An identity crisis? Examining IMF financial programming," World Development, Elsevier, vol. 34(6), pages 964-980, June.
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    12. K.S. Jomo & Ilene Grabel & Gerald Epstein, 2003. "Capital Management Techniques In Developing Countries: An Assessment of Experiences From the 1990s and Lessons for the Future," Working Papers wp56, Political Economy Research Institute, University of Massachusetts at Amherst.
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    19. Ernest Aryeetey, 2003. "Recent Developments in African Financial Markets: Agenda for Further Research," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 12(Supplemen), pages 111-152, September.
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    Citations

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    Cited by:

    1. James Heintz & Robert Pollin, 2008. "Targeting Employment Expansion, Economic Growth and Development in Sub-Saharan Africa: Outlines of an Alternative Economic Programme for the Region," Published Studies targeting_employment_expa, Political Economy Research Institute, University of Massachusetts at Amherst.
    2. repec:mje:mjejnl:v:11:y:2015:i:2:p:49-64 is not listed on IDEAS
    3. Sunday Osahon Igbinedion & Frank Iyekoretin Ogbeide, 2016. "Monetary Policy and Manufacturing Capacity Utilization: Further Evidence from Nigeria," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 14(2), pages 159-174.
    4. repec:ilo:ilowps:488128 is not listed on IDEAS
    5. repec:ilo:ilowps:465873 is not listed on IDEAS
    6. Rick Rowden, 2010. "Poverty reduction is not development," Review of African Political Economy, Taylor & Francis Journals, vol. 37(126), pages 503-516, December.
    7. Gerald Epstein & Ilene Grabel, 2007. "Financial Policy," Publications 3, International Policy Centre for Inclusive Growth.
    8. Gerald Epstein, 2009. "Rethinking Monetary and Financial Policy: Practical suggestions for monitoring financial stability while generating employment and poverty reduction," Published Studies ilo_epstein11_09, Political Economy Research Institute, University of Massachusetts at Amherst.
    9. van Waeyenberge, Elisa. & Bargawi, Hannah., 2011. "Macroeconomic policy for "full and productive employment and decent work for all" : Uganda country study," ILO Working Papers 994658733402676, International Labour Organization.
    10. Epstein, Gerald., 2015. "Development central banking : a review of issues and experiences," ILO Working Papers 994881283402676, International Labour Organization.

    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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