Robustness of the Job – Finding, Job Loss (JFJL) Model in Modeling the Employment and Unemployment Rates of Ghana

The issues of employment and unemployment have become major macroeconomic factors that determine growth patterns of the modern Ghanaian economy. Periods of economic boom or growth of output can be associated with high rates of employment while recession periods correlate positively with woeful rates of unemployment. This undoubtedly suggests an inverse association between high rates of employment and recession; and high rates of unemployment and economic boom. This paper evaluates the robustness of the Job – Finding, Job Loss (JFJL) model in modeling the employment and unemployment rates in Ghana. It uses the job – finding and separation parameters as bases to model the employment and unemployment rates of Ghana in the form of simple Non – Homogenous First Order Ordinary Differential Equations. The resulting model is obtained by solving the differential equations via the Method of Variation of Constants (MVC). The JFJL model suggests an environment in which labour force is allowed to vary with time. It assumes a stable state equilibrium condition of the labour market which assisted in obtaining the same expressions as those for the natural rates of employment and unemployment. The predictive ability of the models is ascertained with real data obtained from the Ministry of Labour and Employment, which served as the inputs of simple input/output functions written in Microsoft Excel. The data cover labour force, employment, employment rates, unemployment and unemployment rates from the year 2000 through to 2014. The results evince the closeness of the predicted values or rates to the actual values or rates of employment and unemployment. In fact, at certain points in time especially getting to the end of the period (2013, 2014 and 2015), the model predicted approximately the same values and rates as the actual values and rates of employment and unemployment. Thus, the robustness of the JFJL model in predicting the employment and unemployment rates in the Ghanaian economy is established. Keywords: Employment and unemployment rates, Job – Loss, Job Finding model, Non –        homogeneous first order ordinary differential equations, Method of variation of constants, Ministry of Labour and Employment and Stable state equilibrium of the labour marke

THE QUANTITY THEORY OF MONEY AND ITS LONG-RUN IMPLICATIONS: EMPIRICAL EVIDENCE FROM NIGERIA

The Quantity Theory of Money (QTM) is one of the popular classical macroeconomic models that explain the relationship between the quantity of money in an economy and the level of prices of goods and services. This study investigates this relationship for Nigeria economy over the period of 1960 to 2009. To check the stationarity properties, we employed Augmented Dickey Fuller (ADF) and Phillips-Perron (PP) test and found all the concerned variables are stationary only in the first differenced form. Using Johansen cointegration method, the empirical findings indicate that there exists long run cointegrating relationship among the concerned variables. Then applying the Granger causality test, we found a unidirectional causal relationship running from money supply to inflation which provides evidence in support for monetarist.s view. In addition, this study does not provide evidence in supporting the well known fisher effect for Nigeria. Causality does not strictly run from inflation to interest rates as suggested by the Fisher hypothesis, instead a reversed causality between the variables is found. We finally used Wald test to verify the restrictions imposed on money aggregates and output, and we concluded and confirmed the proposition of quantity theory of money that inflation is a monetary phenomenon

Modelling the Economic Growth Rate of Ghana using the Solow Model

The main objective of this study was to use the Solow growth model (Augmented Cobb-Douglas production function) as a basis to model the economic growth of Ghana during the period 1990 to 2010. Economic growth around the world has not been equal for a long time. Some economies grow faster than others. Economists have predicted that the slower growing economies will eventually converge to the faster growing economies at some point in time. In this study, we model the economic growth of Ghana using the Solow production model and applying growth differential equations. Starting from the estimates of the parameters from other studies, the growth model was simulated for the period 1990 to 2010. The recording and computation of the data was done using Matlab, SPSS and Excel. The computations were Capital, Labour force, Total Factor Productivity, and Total Production and the results from models were compared with the real GDP growth figures and variations noted. The estimations from the model were compared with the actual figures from the Ghana Statistical Service, World Bank and Bank of Ghana. The model provides a good approximation of the dynamics of the Ghanaian economy for the 1990 to 2010 periods, with respect to the dynamics of the real aggregate GDP growth and to the ratios of the main macroeconomic variables, like production per worker, capital-output ratio or capital per worker. The results showed a very close relationship between the actual and calculated growth rates over the periods 1990 to 2010. The actual average growth rate over the period was 4.5% as compared to the calculated average value of 4.21%. In conclusion, there was a correlation between the actual growth rates and the calculated but the strength was weak. Keywords: Solow growth model, Economic growth of Ghana, Real GDP growth, Macroeconomic variables, actual and calculated growth rat