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Central bank independence and monetary policy outcomes in Ghana: a Bayesian structural time series approach

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  • Isaac Bentum-Ennin
  • Paul Owusu Takyi

Abstract

The paper examines the impact of central bank independence (CBI) on monetary policy outcomes in Ghana using annual data from 1985 to 2019 and the novel Bayesian structural time series approach. The results reveal that the granting of autonomy to the Bank of Ghana has increased economic growth by about 43% in relative terms and 1.9% in absolute terms. In absolute terms, the CBI has increased the value of the Ghana cedi to the US dollar by 1.8. Relatively, the loss in value of the local currency during the CBI period is about 400%. Also, although CBI resulted in a reduction in inflation by 10% and 41% in absolute and relative terms, respectively, these effects are not statistically significant. From a policy perspective, strengthening the operations of the Bank of Ghana is necessary to achieve its desired objectives of lower inflation, higher economic growth, and a strong local currency.

Suggested Citation

  • Isaac Bentum-Ennin & Paul Owusu Takyi, 2024. "Central bank independence and monetary policy outcomes in Ghana: a Bayesian structural time series approach," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 17(4), pages 280-300.
    • Handle: RePEc:ids:ijmefi:v:17:y:2024:i:4:p:280-300
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