Oil price shocks in Ghana lead to economic decline and inflation surge.
The study looked at how changes in oil prices affect the economy of Ghana. They found that when oil prices go up, it leads to higher prices for goods and services, which then causes a drop in real output. To counter this, the government initially makes it easier to borrow money, but this leads to higher inflation. To combat the inflation, they then make it harder to borrow money, which further decreases output. After an oil price increase, it takes a long time for the economy to recover back to its original state.