Empirical Essays in Open Economy Macroeconomics: a Policy Regime Analysis of Monetary Policy Rules Andthe Determination of the Current Account in Smallopen Economies

This book is comprised of two parts. The first usesdata on Canada to determine the role asset pricechanges should play in the conduct of monetary policywithin the inflation targeting and money growthtargeting frameworks. The findings indicate thatirrespective of the targeting framework, the policyrule that incorporates a response to asset pricechanges controls inflation better. Contrary to theconventional view, simulation experiments indicatethat the money growth targeting policy rule is moreefficient in controlling inflation than the inflationtargeting policy rule. The second part presents theoretical and econometricanalysis of the determinants of current accountbalances for Ghana. The results point to changes inworld real interest rate, exchange rate, and theterms of trade as important determinants of currentaccount. A policy regime analysis shows that therecent implementation of capital liberalizationpolicies in Ghana has enabled Ghanaians to use theinternational financial market to smooth consumption. The analysis should be useful to graduate students inbusiness schools and economic departments, and anyperson who is interested in internationalmacroeconomic issues.