The fourth quarter dip in unemployment rates in Ghana: A systematic account of labour market activities in 2022

Research on the impact of macro policy shocks on the real economy has usually focused on the behaviour of highly aggregated variables. In this research, we focus on disaggregated, sector-level indicators to unveil the idiosyncrasies in the performance of disaggregated variables that are usually concealed when studying the behaviour of aggregate variables. We analyzed empirical evidence from Ghana using a Structural Vector Autoregression approach. The results show that the transmission of various macro policies and supply/cost shocks is conditional on sectoral idiosyncrasies. Fiscal programs contribute the most to agricultural output growth and the least to industrial production. The downturn from rising costs and supply disruptions is more severe and lasting in the agriculture sector than in the service sector. The evidence shows that fiscal consolidation centered on government consumption cuts would not drag growth over the medium-term. We conclude that targeted policies are needed to complement countercyclical macroeconomic policies to facilitate broad-based economic recovery.