Does Nominal Devaluation Precede Real Devaluation in Floating Exchange Rate Regime? An Empirical Investigation for Ghana

Abstract

This paper attempts to examine the link between nominal devaluation and real devaluation with special reference to Ghana. To find this relationship, we have employed some sophisticated tests such as ADF, P-P & Ng-Perron unit root tests; ARDL Bounds Testing, and DOLS test for the long run correlation. The findings of the study suggest that nominal devaluation leads to real devaluation both in the long run and in the short run in the case of Ghana.

Keywords

• Nominal devaluation
• real devaluation
• Inflation
• exchange rate regime
• Ghana