American Journal of Economics, Finance and Management
Articles Information
American Journal of Economics, Finance and Management, Vol.3, No.1, Feb. 2017, Pub. Date: Aug. 1, 2017
Determinants of Currency Crisis in Ghana, 1990 to 2016
Pages: 1-9 Views: 1568 Downloads: 573
Authors
[01] Emmanuel Dodzi Kutor Havi, Department of Economics, Faculty of Social Studies, Methodist University College Ghana, Accra, Ghana.
Abstract
This article aimed at the determinants of currency crisis in Ghana using multinomial logistic regression. A composite variable, exchange market pressure index was constructed and categorized into three based on the following criteria; appreciation, depreciation in exchange market pressure and reference point where there is no need for exchange market pressure rise or fall. A monthly data from 1990 to 2016 was used for the analysis. It was found out that due to the appreciation in exchange market pressure index growth rate of domestic credit and growth rate of output are significant determining factors of currency crises As a result, increase in growth rate of domestic credit and increase in growth rate of output will reduce the probability of currency crisis. On the other hand, due to the depreciation in exchange market pressure index, broad money supply-reserves ratio is a significant determining factor of currency crisis occurring. As a result, decrease in broad money supply-reserves ratio will reduce the probability of currency crisis occurring. In conclusion, growth rate of domestic credit, broad money supply-reserves and growth rate of output are significant determinants of currency crisis in Ghana.
Keywords
Currency Crisis, Exchange Market Pressure, Multinomial Logistic Regression
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