Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/72684
Authors: 
Jumah, Adusei
Pastuszyn, Georg
Year of Publication: 
2007
Series/Report no.: 
Reihe Ökonomie / Economics Series, Institut für Höhere Studien (IHS) 212
Abstract: 
The current study examines the relationship between the world oil price and aggregate demand in a developing country, Ghana, via the interest rate channel by means of cointegration analysis. Results of the study indicate that oil price - by impacting the price level positively - negatively impacts real output. The results also indicate that monetary policy is initially eased in response to a surge in the price of oil in order to lessen any growth consequences, but at the cost of higher inflation. The ensuing higher inflation, however, prompts a subsequent tightening of monetary policy leading to a further decline in output. In addition, output does not revert quickly to its initial level after an oil price shock, but declines over an extended period.
Subjects: 
aggregate demand
inflation
monetary policy
oil
JEL: 
C32
E50
O13
Document Type: 
Working Paper

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