Frozen chicken import, domestic chicken production, and real exchange rates in Ghana: A trivariate causality analysis
Frozen chicken import, domestic chicken production, and real exchange rates in Ghana: A trivariate causality analysis

Summary/Abstract: Ghana currently spends over USD 300 million annually on frozen chicken import. As a result, policy makers, researchers, and politicians are worried about the potential impact of escalating imports on the domestic poultry industry and on the Ghanaian cedi. The principal objective of this study is to establish the existence of a joint causal relationship between frozen chicken import, domestic chicken production, and real exchange rate in Ghana using the Breitung and Candelon (2006) frequency domain causality test, Granger causality test, and Vector Autoregressive (VAR) estimation technique. The frequency domain causality test revealed a unidirectional causality running from domestic chicken production to frozen chicken import, and from frozen chicken import to real exchange rate in all time periods. However, in the short run, a bidirectional causality was found between domestic chicken production and real exchange rate. The outcome of this paper has important implications for global food policy and trade policy. The results suggest that domestic chicken production affects real exchange rate via frozen chicken import. Thus, policies that increase domestic chicken production could decrease frozen chicken import and hence stabilize the real exchange rate in Ghana.

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