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External aid inflows and the real exchange rate in Ghana

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  • Harry A. Sackey

Abstract

This paper develops an empirical model for Ghana's real exchange rate with special focus on foreign aid. The novelty of this study is the interfacing of exports with a policy environment, using aid as proxy, to see how it affects export performance. The paper finds that although aid dependence is quite high, aid inflows lead to depreciations in the real exchange rate. Aid inflows have also had a positive impact on export performance. The paper concludes that for external aid to be an effective investment, policy management needs to focus on ensuring the prevalence of sound macroeconomic fundamentals, among others.

Suggested Citation

  • Harry A. Sackey, 2001. "External aid inflows and the real exchange rate in Ghana," Working Papers 93152d10-3d0d-4a67-ba18-a, African Economic Research Consortium.
    • Handle: RePEc:aer:wpaper:93152d10-3d0d-4a67-ba18-a1dfbd5ca4af
    Note: African Economic Research Consortium
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