IDEAS home Printed from https://ideas.repec.org/p/uma/periwp/wp113.html
   My bibliography  Save this paper

Monetary Policy and Financial Sector Reform For Employment Creation and Poverty Reduction in Ghana

Author

Listed:
  • James Heintz
  • Gerald Epstein

Abstract

This report summarizes the findings of a UNDP-sponsored study on the structure of the financial sector, central bank policy, and employment outcomes in Ghana. The financial sector is the primary conduit through which monetary policy affects real economic outcomes, and monetary policy determines the resources available to financial institutions. Therefore, monetary policy must be coordinated with financial sector reforms in order to improve employment opportunities, reduce poverty and support human development. The report develops a critique of financial programming and inflation targeting, presents a series of empirical estimates on the impact of monetary policy variables in Ghana, and describes the elements of an alternative monetary policy. In addition, the report documents the institutional and structural constraints currently operating in the financial system which prevent the sector from facilitating investment, growth, and improved employment opportunities. Econometric estimates of the determinants of investment explicitly link financial variables to real economic activity. The report summarizes a series of financial sector reforms that would improve the financial sector's capacity to move Ghana onto an employment-intensive growth path.

Suggested Citation

  • James Heintz & Gerald Epstein, 2006. "Monetary Policy and Financial Sector Reform For Employment Creation and Poverty Reduction in Ghana," Working Papers wp113, Political Economy Research Institute, University of Massachusetts at Amherst.
  • Handle: RePEc:uma:periwp:wp113
    as

    Download full text from publisher

    File URL: https://per.umass.edu/fileadmin/pdf/working_papers/working_papers_101-150/WP113.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Chirinko, Robert S, 1993. "Business Fixed Investment Spending: Modeling Strategies, Empirical Results, and Policy Implications," Journal of Economic Literature, American Economic Association, vol. 31(4), pages 1875-1911, December.
    2. Gerald Epstein, 2003. "Alternatives to Inflation Targeting Monetary Policy for Stable and Egalitarian Growth: A Brief Research Summary," Working Papers wp62, Political Economy Research Institute, University of Massachusetts at Amherst.
    3. Mario I. Blejer & Alfredo M. Leone & Pau Rabanal & Gerd Schwartz, 2002. "Inflation Targeting in the Context of IMF-Supported Adjustment Programs," IMF Staff Papers, Palgrave Macmillan, vol. 49(3), pages 1-2.
    4. Robert S. Chirinko, 1992. "Business Fixed Investment Spending: A Critical survey of Modeling Strategies, Empirical Results, and Policy Implications," Working Papers 9213, Harris School of Public Policy Studies, University of Chicago.
    5. Aryeetey, Ernest & Udry, Christopher, 1997. "The Characteristics of Informal Financial Markets in Sub-Saharan Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 6(1), pages 161-203, March.
    6. Andong Zhu & Robert Pollin, 2005. "Inflation and Economic Growth: A Cross-Country Non-linear Analysis," Working Papers wp109, Political Economy Research Institute, University of Massachusetts at Amherst.
    7. James Heintz, 2005. "Employment, Poverty, and Gender in Ghana," Working Papers wp92, Political Economy Research Institute, University of Massachusetts at Amherst.
    8. Easterly, William, 2006. "An identity crisis? Examining IMF financial programming," World Development, Elsevier, vol. 34(6), pages 964-980, June.
    9. K.S. Jomo & Ilene Grabel & Gerald Epstein, 2003. "Capital Management Techniques In Developing Countries: An Assessment of Experiences From the 1990s and Lessons for the Future," Working Papers wp56, Political Economy Research Institute, University of Massachusetts at Amherst.
    10. Laurence Ball, 1994. "What Determines the Sacrifice Ratio?," NBER Chapters, in: Monetary Policy, pages 155-193, National Bureau of Economic Research, Inc.
    11. Nii K. Sowa & Ivy K. Acquaye, 1999. "Financial and foreign exchange markets liberalization in Ghana," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(3), pages 385-409.
    12. Ernest Aryeetey, 2003. "Recent Developments in African Financial Markets: Agenda for Further Research," Journal of African Economies, Centre for the Study of African Economies, vol. 12(Supplemen), pages 111-152, September.
    13. International Monetary Fund, 2004. "Ghana: Poverty Reduction Strategy Paper Annual Progress Report," IMF Staff Country Reports 2004/207, International Monetary Fund.
    14. William Easterly, 2002. "An Identity Crisis? Testing IMF Financial Programming," Working Papers 9, Center for Global Development.
    15. Ocampo, José Antonio, 2003. "Capital-account and counter-cyclical prudential regulations in developing countries," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1796, September.
    16. Mr. Johan Mathisen & Thierry D. Buchs, 2005. "Competition and Efficiency in Banking: Behavioral Evidence from Ghana," IMF Working Papers 2005/017, International Monetary Fund.
    17. Harrison, Ann, 1996. "Openness and growth: A time-series, cross-country analysis for developing countries," Journal of Development Economics, Elsevier, vol. 48(2), pages 419-447, March.
    18. Corrinne Ho & Robert N. McCauley, 2003. "Living with flexible exchange rates: issues and recent experience in inflation targeting emerging market economies," BIS Working Papers 130, Bank for International Settlements.
    19. Ndikumana, Leonce, 2000. "Financial Determinants of Domestic Investment in Sub-Saharan Africa: Evidence from Panel Data," World Development, Elsevier, vol. 28(2), pages 381-400, February.
    20. Frederic S. Mishkin & Adam S. Posen, 1997. "Inflation targeting: lessons from four countries," Economic Policy Review, Federal Reserve Bank of New York, vol. 3(Aug), pages 9-110.
    21. Fergus Lyon, 2003. "Trader associations and urban food systems in Ghana: institutionalist approaches to understanding urban collective action," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 27(1), pages 11-23, March.
    22. corrinne ho & robert n mccauley, 2004. "Living with flexible exchange rates:," International Finance 0411003, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Richard Kwabi Ayisi & Joseph Adu, 2017. "Monetary Policy in a Markov-Switching VECM: Implications for the Cost of Disinflation in Ghana," American Journal of Economics and Business Administration, Science Publications, vol. 8(2), pages 53-61, March.
    2. Epstein, Gerald., 2009. "Rethinking monetary and financial policy : practical suggestions for monitoring financial stability while generating employment and poverty reduction," ILO Working Papers 994344393402676, International Labour Organization.
    3. Frank Iyekoretin Ogbeide & Hillary Kanwanye & Sunday Kadiri, 2015. "The Determinants of Unemployment and the Question of Inclusive Growth in Nigeria: Do Resource Dependence, Government Expenditure and Financial Development Matter?," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 11(2), pages 49-64.
    4. repec:ilo:ilowps:465873 is not listed on IDEAS
    5. Rick Rowden, 2010. "Poverty reduction is not development," Review of African Political Economy, Taylor & Francis Journals, vol. 37(126), pages 503-516, December.
    6. repec:ilo:ilowps:455446 is not listed on IDEAS
    7. Gerald Epstein, 2009. "Rethinking Monetary and Financial Policy: Practical suggestions for monitoring financial stability while generating employment and poverty reduction," Published Studies ilo_epstein11_09, Political Economy Research Institute, University of Massachusetts at Amherst.
    8. Ahmed, Ovais & Mashkoor, Aasim, 2016. "The wrong impact of Fiscal Imbalance on economic growth and Monetary Policy consequences (A case of Pakistan)," MPRA Paper 69752, University Library of Munich, Germany.
    9. Epstein, Gerald., 2015. "Development central banking : a review of issues and experiences," ILO Working Papers 994881283402676, International Labour Organization.
    10. Gerald Epstein & James Heintz & Léonce Ndikumana & Grace Chang, 2011. "Employment, Poverty and Economic Development in Madagascar," Published Studies ndikumana_ilo2010, Political Economy Research Institute, University of Massachusetts at Amherst.
    11. Richard Kofi Asravor & Frank Gyimah Sackey, 2022. "Wage Price Floors and Sectoral Employment Outcomes in Ghana," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 65(1), pages 103-122, March.
    12. James Heintz & Lynda Pickbourn, 2012. "The Determinants of Selection into Non-agricultural Self-employment in Ghana," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 6(2), pages 181-209, May.
    13. James Heintz & Robert Pollin, 2008. "Targeting Employment Expansion, Economic Growth and Development in Sub-Saharan Africa: Outlines of an Alternative Economic Programme for the Region," Published Studies targeting_employment_expa, Political Economy Research Institute, University of Massachusetts at Amherst.
    14. Sunday Osahon Igbinedion & Frank Iyekoretin Ogbeide, 2016. "Monetary Policy and Manufacturing Capacity Utilization: Further Evidence from Nigeria," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 14(2), pages 159-174.
    15. repec:ilo:ilowps:488128 is not listed on IDEAS
    16. repec:ilo:ilowps:434439 is not listed on IDEAS
    17. Epstein, Gerald. & Heintz, James. & Ndikumana, Léonce. & Chang, Grace., 2010. "Employment, poverty and economic development in Madagascar : a macroeconomic framework," ILO Working Papers 994554463402676, International Labour Organization.
    18. Bamidele M. Ilo, 2015. "Capital Market and Unemployment in Nigeria," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 11(5), pages 129-140, October.
    19. Waeyenberge, Elisa Van. & Bargawi, Hannah., 2011. "Macroeconomic policy for "full and productive employment and decent work for all" : Uganda country study," ILO Working Papers 994658733402676, International Labour Organization.
    20. Reena Agrawal, 2018. "Measures Adopted for Promoting Inclusive and Sustainable Growth," Paradigm, , vol. 22(2), pages 143-159, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gerald Epstein & James Heintz, 2006. "Monetary Policy and Financial Sector Reform for Employment Creation and Poverty Reduction in Ghana," Research Report 2, International Policy Centre for Inclusive Growth.
    2. Gerald Epstein, 2009. "Rethinking Monetary and Financial Policy: Practical suggestions for monitoring financial stability while generating employment and poverty reduction," Published Studies ilo_epstein11_09, Political Economy Research Institute, University of Massachusetts at Amherst.
    3. Ilker Domaç & Eray M. Yücel, 2005. "What Triggers Inflation in Emerging Market Economies?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(1), pages 141-164, April.
    4. Sanchez-Fung, Jose R., 2002. "Inflation targeting and monetary analysis in Chile and Mexico," Economics Discussion Papers 2002-7, School of Economics, Kingston University London.
    5. Luiz Fernando de Paula, 2007. "FINANCIAL LIBERALISATION, EXCHANGE RATE REGIME AND ECONOMIC PERFORMANCE IN BRICs COUNTRIES," Anais do XXXV Encontro Nacional de Economia [Proceedings of the 35th Brazilian Economics Meeting] 016, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    6. Javier Gómez Pineda, 2004. "Inflation Targeting, Sudden Stops and the Cost of Fear of Floating," Borradores de Economia 276, Banco de la Republica de Colombia.
    7. Javier Guillermo Gómez, 2006. "La Política Monetaria En Colombia," Borradores de Economia 3054, Banco de la Republica.
    8. Nyoni, Thabani, 2018. "What determines private investment in Burundi?," MPRA Paper 87614, University Library of Munich, Germany.
    9. repec:ilo:ilowps:434439 is not listed on IDEAS
    10. Goran Petrevski, 2023. "Macroeconomic Effects of Inflation Targeting: A Survey of the Empirical Literature," Papers 2305.17474, arXiv.org.
    11. Mr. Douglas Laxton & Mr. Andrew Berg & Mr. Philippe D Karam, 2006. "A Practical Model-Based Approach to Monetary Policy Analysis—Overview," IMF Working Papers 2006/080, International Monetary Fund.
    12. Petrevski, Goran, 2023. "Macroeconomic Effects of Inflation Targeting: A Survey of the Empirical Literature," EconStor Preprints 271122, ZBW - Leibniz Information Centre for Economics.
    13. Timothy Erickson & Toni M. Whited, 2000. "Measurement Error and the Relationship between Investment and q," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 1027-1057, October.
    14. Balázs Égert, 2018. "Regulation, Institutions and Aggregate Investment: New Evidence from OECD Countries," Open Economies Review, Springer, vol. 29(2), pages 415-449, April.
    15. António Duarte, 2009. "The Portuguese Disinflation Process: Analysis of Some Costs and Benefits," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 16(1), pages 157-173, May.
    16. Mazumder, Sandeep, 2014. "Determinants of the sacrifice ratio: Evidence from OECD and non-OECD countries," Economic Modelling, Elsevier, vol. 40(C), pages 117-135.
    17. Oleksandr Shcherbakov, 2022. "Firm‐level investment under imperfect capital markets in Ukraine," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(1), pages 227-255, February.
    18. Karl Whelan, 2002. "Some New Economy Lessons for Macroeconomists," Recherches économiques de Louvain, De Boeck Université, vol. 68(1), pages 21-36.
    19. Kiley, Michael T., 2001. "Computers and growth with frictions: aggregate and disaggregate evidence," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 55(1), pages 171-215, December.
    20. Giuseppe Cinquegrana, 2014. "Effetti differenziali delle politiche monetarie sugli investimenti delle imprese industriali italiane: un?analisi con metodologia panel," RIVISTA DI ECONOMIA E STATISTICA DEL TERRITORIO, FrancoAngeli Editore, vol. 2014(3), pages 40-78.
    21. Bergman, Mats A. & Johansson, Per & Bergman, M.A., 2002. "Large investments in the pulp and paper industry: a count data regression analysis," Journal of Forest Economics, Elsevier, vol. 8(1), pages 29-52.

    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uma:periwp:wp113. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Judy Fogg (email available below). General contact details of provider: https://edirc.repec.org/data/permaus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.