Fiscal Aggregates, Government Borrowing and Economic Growth in Ghana An error correction approach
Emmanuel Atta Anaman,
Samuel Gameli Gadzo,
John Gartchie Gatsi and
Advances in Management and Applied Economics, 2017, vol. 7, issue 2, 5
The relationship between fiscal policy and economic growth has been the subjectÂ of running arguments and debates among economic theorists and researchers for aÂ long time. Whilst some economists contend that fiscal policy inherently distractsÂ growth, there are others who believe that it can spur growth. The objective of thisÂ paper is to examine and ascertain the nexus between fiscal policy and economicÂ growth using the Ghanaian situation by employing a dynamic econometricÂ approach and by so doing help in shaping up knowledge in this domain. The studyÂ adopted the explanatory research design and a quarterly data set was drawn fromÂ 1982 to 2014. The error correction model was used in two ways. The firstÂ approach was by using the co integrating relationships and the second was directlyÂ imposing long run homogeneity thus constructing the ECM without estimatedÂ parameters. The empirical analysis shows that there is a long run relationshipÂ between government expenditure and economic growth; in the short run howeverÂ both domestic borrowing and external borrowing have negative effects onÂ economic growth but growth in indirect taxes rather positively influencesÂ economic growth, going against the theoretical position that taxes have aÂ distortionary effect on economic growth .The results also show that at least 14%Â of the innovations in economic growth can be attributed to movements inÂ government expenditure. The dynamic effects of fiscal policy on growth from anÂ error correction approach provide empirical evidence of reality especially duringÂ an era when there is a debate in the country on the use of and the effectiveness ofÂ fiscal policy.JEL classification numbers: O40, O47Keywords: Error correction, Fiscal Aggregates, Government Borrowing;Â Economic Growth
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:spt:admaec:v:7:y:2017:i:2:f:7_2_5
Access Statistics for this article
More articles in Advances in Management and Applied Economics from SCIENPRESS Ltd
Series data maintained by Eleftherios Spyromitros-Xioufis ().