Ghartey, Edward, E
Author Affiliation, Ana.
Department of Economics
Macroeconomic instability and inflationary financing in Ghana
Date of Publication
Two co-integrated relations exist among macroeconomic variables. A class of vector error correction model has been estimated, identified and used to study policy implications. Although the budget deficit as a percentage of GDP was permanently reduced by improvements in financial intermediation, it was increased by changes in monetary policy, transactions, devaluation policy and inflation. Granger causality, impulse response functions, vector decompositions and sensitivity analysis showed deficits as a share of GDP to be inflationary, and were indirectly financed by base money through money printing; inflation was monetized, self-sustaining, and retarded economic growth.....