Date of Award
Master of Science
This paper investigates the factors driving the real exchange rate in the Ghanaian economy. The paper aimed at finding the principal factor(s) that influence the real exchange rate and explains the channels by which these factors exert their influence using standard empirical methods of vector autoregressive (VAR) models. The paper established that inflation rate differentials and interest rate differentials influence the exchange rate through the expectations medium. Domestic and foreign money supplies which are exogenous macroeconomic variables were also found to be important in the Ghanaian money market as far as the exchange rate matters. The paper also highlighted how the great recession in the United States may have affected the cedi/dollar rate of exchange after this economic event swept through the United States generating spillover effects on economies around the world.
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