Estimation of a Behavioral Equilibrium Exchange Rate Model for Ghana
23 Pages Posted: 23 Aug 2007
Date Written: July 2007
Abstract
The paper estimates a behavioral equilibrium exchange rate model for Ghana. Regression results show that most of the REER's long-run behavior can be explained by real GDP growth, real interest rate differentials (both relative to trading-partner countries), and the real world prices of Ghana's main export commodities. On the basis of these fundamentals, the REER in late 2006 was found to be very close to its estimated equilibrium level. The results also suggest, that deviations from the equilibrium path are eliminated within two to three years.
Keywords: Working Paper, Ghana, Export prices, Commodity prices, External competitiveness, Economic models
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