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This paper examines the major drivers of the asset counterpart of the observed money supply in Ghana since the adoption of the Economic Recovery Programmes in Ghana. Using the traditional money multiplier approach, the relative contributions of fiscal financing and capital inflows to the money supply process were examined. It is found that until the mid nineties, fiscal deficit financing was the major driver of the money supply process. In the later years, however, changes in the Net Foreign Assets of the Bank of Ghana, driven largely by foreign aid and remittances inflows, appear to be the major cause of monetary expansion.
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