Real Effective Exchange Rate Dynamics in Ghana

Abstract

This study seeks to analyse the long term competitiveness of the Ghanaian economy in relation to her trading partners. The study relied on secondary data obtained from the World Bank database on Ghana. Specifically, the study makes use of annual real effective exchange rate, import and export of goods and services of Ghana between 1980 and 2013. We employed the techniques of robust regression to estimate the parameters and use difference equation to analyse the resulting equations. The study reveals that Ghanaian economy will continue to be uncompetitive for a long time to come as shown by the falling real effective exchange rate as time approaches infinity, though it converges.