Abstract:
This study sought to determine the effect of real effective exchange rate on
economic growth in Ghana using annual data for the period 1984 to 2014. The
study employed the Auto Regressive Distributed Lag Estimation technique as
well as the Bounds Testing approach to cointegration to establish a long run
relationship between Economic Growth and Real Effective Exchange Rate in
Ghana. The result suggests that real exchange rate, capital stock, and labour
force exert a positive and statistically significant effect on economic growth
both in the long-run and short-run. The study recommended that there is the
need to ensure macroeconomic stability by ensuring exchange rate stability;
productive government expenditure as well as ensuring the growth of the capital
stock.
