Cocoa, Gold, and Oil: Evaluating the Presence of the Dutch Disease in Ghana

Abstract

This paper seeks to find whether Ghana suffered from the Dutch Disease due to its reliance on cocoa, gold, and oil exports. A structural vector autoregression that includes foreign GDP, commodity price, resource exports, non-resource exports, inflation, real GDP, the real effective exchange rate, and the interest is employed to examine if shocks in the model increase resource exports and harm non-resource exports via a real appreciation of the exchange rate. Ultimately, this model is unable to find evidence of the Dutch Disease in Ghana, suggesting that the problem has not existed over the time sample period, or that the monetary authorities in Ghana have been able to prevent it from taking hold.