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The study employed a Structural VAR model, using monthly time series data from 2002 to 2017 to assess the relationship between trade openness and effectiveness of monetary policy in Ghana. The empirical results revealed that as the degree of trade openness increases, monetary policy becomes more effective in reducing the rate of inflation. However, monetary policy is less effective to reduce the output gap. Therefore, the results suggest that monetary policy authorities must take into account the level of trade openness whenever they are formulating monetary policy. [ABSTRACT FROM AUTHOR]

African economies count among the fastest-growing economies in the world. In particular, West African economies have grown by an average of 5.7% in 2013 and 6% in 2014, despite the battle with the Ebola virus. Ghana has been at the forefront of this growth with an average economic growth of 8% in the period 2001-2014 (AfDB 2015). The challenge faced by African countries, such as Ghana, is to maintain this high economic growth rate in order to finance a number of developmental projects and curb the rampant poverty prevalent in a number of African countries. The sustainability of Ghana's growth path and the economic policy that ensued necessitates a sound knowledge of the drivers and determinants of its economic growth. This paper contribute to the literature on economic growth in Ghana, as a case study of a fast-growing economy in Africa, by applying the BMA analysis in determining the drivers of the country's economic growth. To the best of our knowledge, there is no study that identifies the drivers of economic growth in Ghana by using the BMA approach. The BMA technique provides the advantage over single-model techniques by combining and averaging different existing models and theories to determine the driver of economic growth. Yearly data ranging from 1970 to 2012 was collected from the World Bank Development Indicators (WDI 2012) and International Monetary Fund (IMF) statistics. There are 22 variables used in the model estimation, including the GDP per capita as the dependent variable. Explanatory variables are selected by taking into account their likelihood of determining economic growth in Ghana. Moreover, these variables are selected by accounting for the particularities of the Ghanaian economies, such as the existence of the dual economy and its reliance on natural resources for export revenues. Using the 50% threshold, as suggested by Raftery (1995), for the selection of relevant variables that drive economic growth in Ghana, the empirical results show that variables such as population density, crop production, inflation rate, labor force, current account balance and population growth are the important drivers of economic growth in Ghana. The paper suggests the following recommendation in the light of these results. Firstly, inflation targeting should remain the anchor of monetary policy in Ghana. Secondly, this paper recommends that the government of Ghana develops policies and strategies that enable the crowding-in of the private sector. Finally, this paper recommends that the government of Ghana promotes crop production in both commercial and subsistence sectors. [ABSTRACT FROM AUTHOR]