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Unravelling the Tapestry: Understanding the Factors Shaping Current Account Imbalances in Ghana

Author

Listed:
  • Yeboah, Samuel
Abstract
This research aims to unravel the factors shaping current account imbalances in Ghana, with a focus on understanding the underlying causes and implications for the country's economic stability. The study explores the multifaceted nature of these imbalances by examining structural factors, exchange rate dynamics, monetary policy, external factors, and capital flows. It identifies limited diversification of the economy, inadequate infrastructure, and low productivity levels as significant structural constraints that hinder Ghana's ability to reduce import dependency and achieve a more balanced current account. Furthermore, it highlights the role of currency depreciation, inconsistent monetary policies, and inflationary pressures in contributing to trade imbalances and capital flight, exacerbating current account deficits. The study also considers external factors such as commodity price fluctuations, global trade patterns, and regional integration, which can influence Ghana's current account imbalances. Additionally, it explores the implications of these imbalances for external debt sustainability, terms of trade, and overall economic performance. The research provides policymakers and stakeholders with valuable insights into the factors driving Ghana's current account imbalances, informing the formulation of effective policy measures to address these imbalances and promote sustainable economic development.

Suggested Citation

  • Yeboah, Samuel, 2023. "Unravelling the Tapestry: Understanding the Factors Shaping Current Account Imbalances in Ghana," MPRA Paper 117638, University Library of Munich, Germany, revised 06 Jun 2023.
    • Handle: RePEc:pra:mprapa:117638
    as

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    File URL: https://mpra.ub.uni-muenchen.de/117638/1/FACTORS%20INFLUENCING%20CURRENT%20ACCOUNT%20IMBALANCES%20IN%20GHANA%20FOR%20MPRA.pdf
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    References listed on IDEAS

    as
    1. C. Fred Bergsten & Joseph E. Gagnon, 2017. "Currency Conflict and Trade Policy: A New Strategy for the United States," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 7267, April.
    2. Joseph E. Gagnon & Madi Sarsenbayev, 2021. "Fiscal and exchange rate policies drive trade imbalances: New estimates," Working Paper Series WP21-4, Peterson Institute for International Economics.
    3. repec:aer:wpaper:436 is not listed on IDEAS
    4. Calista Cheung & Davide Furceri & Elena Rusticelli, 2013. "Structural and Cyclical Factors behind Current Account Balances," Review of International Economics, Wiley Blackwell, vol. 21(5), pages 923-944, November.
    5. Sebil Olalekan Oshota & Ibrahim Adegoke Adeleke, 2015. "Determinants of the Current Account Balance in Nigeria, Ghana and Cote d’Ivoire," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 11(3), pages 127-145, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Current account imbalances; Ghana; Trade deficit; Balance of payments; Structural factors; Diversification of the economy; Infrastructure; Productivity levels; Exchange rate dynamics; Monetary policy; Currency depreciation; Inflationary pressures; External factors; Commodity price fluctuations; Global trade patterns; Regional integration; Capital flows; Foreign direct investment; Portfolio investment; External debt sustainability; Terms of trade; Economic performance;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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