The Sources of Business Cycles in a Low Income Country

ByRomain Houssa, Jolan Mohimont, Christopher Otrok

February 25, 2015

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We examine the role of global and domestic shocks in driving macroeconomic fluctuations for Ghana. We are able to study the impact of exogenous shocks including productivity, credit supply, and commodity price shocks. We identify the shocks with a combination of sign and recursive restrictions within Bayesian VAR models. As a benchmark we provide results for South Africa to document the difference between two economies with similar structures but different levels of development. We find that global shocks play a more dominant role in South Africa than in Ghana. These shocks operate through three channels: trade, credit and commodity prices.

Subject: Commodity price shocks, Credit, Foreign exchange, Inflation, Money, Prices, Production, Productivity, Real effective exchange rates

Keywords: Africa, Bayesian VAR, commodity price, Commodity price shocks, Credit, credit shock, Credit Shocks, credit supply shock, Developing Countries, Global, Inflation, inflation targeting, Macroeconomic Stabilization Policies, monetary policy, Productivity, productivity shock, Real effective exchange rates, SA credit, SA default, Sign Restrictions, South Africa statistics, WP

Pages:
34
Volume:
2015
DOI:
https://doi.org/10.5089/9781498310147.001
Issue:
040
Series:
Working Paper No. 2015/040
Stock No:
WPIEA2015040
ISBN:
9781498310147
ISSN:
1018-5941

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