Estimating the effect of currency substitution on exchange rate volatility: Evidence from Ghana

This paper investigates the impact of currency substitution on exchange rate volatility using monthly data from January 1990 to May 2019. The applies exponential generalized autoregressive conditional heteroscedastic in mean (EGARCH-M) model as estimation technique. results reveal that has a significant positive volatility. also confirms existence leverage effects It is revealed negative shocks are found have greater effect than shocks. Furthermore, indicate inflation targeting framework Based findings and discussion, concludes increases Ghana. Given findings, vital policy implications aimed at reducing or eliminating been provided for consideration.