A time-series simulation approach to the consequences of export instability for developing countries : the case of post-war Ghana
The object of this thesis is to examine the effects of export instability on post-war Ghana by seeking to identify the mechanism through which fluctuations were transmitted from the export to the domestic sector. This involves the construction and estimation of a macroeconomic model over the period 1956 to 1969, and the analysis of its dynamic properties by means of simulation. It is intended to extend our knowledge in this area of development economics by switching the focus of analysis to a time-series basis and demonstrating how the consequences of fluctuations in exports depend critically on the structural characteristics of an economy and the assumptions made about behaviour under uncertainty. We believe that this provides both the basis of an alternative methodology to the one currently in use, and a detailed investigation of one particular economy. In chapter 1 we present some background to the debate and outline the methodological framework employed. It includes a critical review of the literature, some historical background on Ghana, the reasons for its selection as a case-study; and an explanation of the-Methodology adopted in this study. In chapter 2 the general nature of the cocoa market is discussed, a model of the cocoa market is constructed and estimated, and its linkages with the Ghanaian economy explLained. In chapter 3, a macroeconomic model for Ghana is estimated and discussed in the light of hypotheses about the transmission of e sport fluctuations. In chapter 4, this model is simulated to investigate its dynamic properties and to quantify the implications of export market fluctuations. In our conclusion, we suggest that our methodology provides a useful basis for further research; and that export instabilitty had important, albeit complex, repercussions on the Ghanaian ecoinomy over the time period under investigation.