Technological shocks mechanism on Macroeconomic Variables: A Dynamic Stochastic General Equilibrium (DSGE) approach.

Abstract

As Ghana assumes a position of oil producer and middle-income country, it must learn to effectively deal with the related pressures from shocks. We analyze the effects of productivity shocks on Ghana’s total output using the multi-sector dynamic stochastic general equilibrium (DSGE) model. It was actualized that a productivity shock results in a temporary shrinkage in the final goods sectors due to the reallocation of labour from the final and intermediate goods sectors. We demonstrated that technological shock induces an initial fall in marginal cost of production but later rises to reach equilibrium