Empirical Essays in Open Economy Macroeconomics

This book is comprised of two parts. The first uses data onCanada to determine the role asset price changes should play in theconduct of monetary policy within the inflation targeting and moneygrowth targeting frameworks. The findings indicate thatirrespective of the targeting framework, the policy rule thatincorporates a response to asset price changes controls inflationbetter. Contrary to the conventional view, simulation experimentsindicate that the money growth targeting policy rule is moreefficient in controlling inflation than the inflation targetingpolicy rule. The second part presents theoretical and econometricanalysis of the determinants of current account balances for Ghana.The results point to changes in world real interest rate, exchangerate, and the terms of trade as important determinants of currentaccount. A policy regime analysis shows that the recentimplementation of capital liberalization policies in Ghana hasenabled Ghanaians to use the international financial market tosmooth consumption. The analysis should be useful to graduatestudents in business schools and economic departments, and anyperson who is interested in international macroeconomicissues.