The purpose of this dissertation is to examine the relationship between monetary expansion and the balance of payments in Ghana during the 1961-1981 period. This is an attempt to develop a model that can be utilized by monetary authorities to generate policies aimed at achieving a desired level of balance of payments. It has been argued in the literature that the expenditures of developing countries are generally characterized by large foreign imports (often consumer goods). Such expenditures affect negatively, the terms of trade, and thereby deteriorates the balance of payments. Consequently, the relationship between changes in domestic credit (a component of money supply) and the balance of payments is predictably positive. / The objectives of the dissertation are couched in the following research questions: (1) What is the relationship between monetary expansion or domestic credit and the balance of payments, and (2) How efficient is monetary policy in addressing both external and internal stability in Ghana and whether monetary policy lacks independence as an instrument of domestic stabilization in Ghana. / A variant of the Polak Model is used to assess the relationship between domestic credit and the balance of payments. The model is constrained to ensure balance of payments equilibrium. A reduced form equation is estimated that indicates the relationship between monetary expansion, exports, capital flows and net foreign assets. In addition, it is shown that a particular rate of change in monetary expansion in every period can be statistically determined which yields a sustained balance of payments equilibrium, regardless of the level of exports, net capital flows and international reserves. While that rate may not be consistent with development objectives in Ghana, it will ensure external and internal stability of the Ghanaian economy. If monetary authorities overshoot the equilibrium level of credit creation, a balance of payments deficit results. The obverse is true when credit is below or at the equilibrium level. / The conclusions of the dissertation are: (1) that excessive monetary expansion during 1961-1981 period is a direct cause of Ghana's chronic balance of payments deficits, and (2) stabilization measures can be effected via the utilization of monetary policy tools. / Source: Dissertation Abstracts International, Volume: 46-09, Section: A, page: 2754. / Thesis (Ph.D.)--The Florida State University, 1985.
| Identifer | oai:union.ndltd.org:fsu.edu/oai:fsu.digital.flvc.org:fsu_75623 |
| Contributors | DONKOR, ALEX AMBROSE., Florida State University |
| Source Sets | Florida State University |
| Detected Language | English |
| Type | Text |
| Format | 208 p. |
| Rights | On campus use only. |
| Relation | Dissertation Abstracts International |
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