This paper conducts a time series analysis of annual data set from 1980-2010, to study the potential determinants of FDI inflows to Ghana. The paper used modern econometric methodology which includes unit root testing, and co-integration analysis. Both the long-run and short run determinants of FDI were analysed using the Vector Error Correction Model (VECM). The VECM also enabled the researchers predict the speedy with which the short-run and long-run disequilibrium is corrected. The robustness of the estimated coefficients was investigated and found to be robust. The research reveals that infrastructural development and political stability have long-run positive and significant impact on the level of FDI inflows in Ghana. The study further established FDI targeting Ghana to be predominantly resource seeking for now. The short-run estimate for natural resources is positive and significant. However, Ghana cannot continue to rely on its natural resources to attract FDI as the long-run relationship is negative. Factors associated with market and efficiency seeking FDI such as market size, and value of the cedi were either found to be insignificant or unstable coefficients on inflows. Political instability is found to significantly deter inflows implying that strengthening of democratic institutions can bring in economic dividends by serving as a driver of FDI. The state of infrastructure is found to be below the required level necessary and sufficient to serve as a driver of inflows hence the negative short term effect. The policy implication of this finding is that for Ghana to fully realize its potential as far as foreign direct investment inflows is concerned it needs to embark on massive investments in infrastructure.

The study sought to investigate the key factors that influence inflation dynamics in Ghana. The study found that inflation in Ghana is determined primarily by inflation persistence, reflecting price expectations, domestic food prices, petroleum prices and exchange rate. The other determinants of inflation used in this study such as money supply and world food prices weakly affect domestic inflation. The study also recommended that anchoring inflation expectations and managing exchange rate misalignment remains key policy strategies in any effort and attempt by the monetary authorities to achieving and maintaining price stability in the country coupled with moderating the negative effects of other inflation determining factors.

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Fiscal Deficit Financing (FDF) has been unsustainably high in Ghana and this has led to unstable and high inflation episodes since 1980. The FDF averaged 4.6% from 2005-2011 and 6.9% to 2012-2018, while inflation averaged 11.0% and 13.1% relative to medium-term to long-term inflation target of 8.0% in the same periods, respectively. Previous studies on deficit financing-inflation nexus in Ghana have primarily focused on linear and symmetric relationship, thereby ignoring the asymmetric policy effects of FDF on inflation dynamics. Disregarding the asymmetry of FDF could impact negatively on efforts of Bank of Ghana in forecasting and controlling inflation effectively. To address this problem, this study was therefore designed to investigate the asymmetric policy effects of FDF on inflation dynamics in Ghana over the period 1980-2018. The fiscal theory of the price level provided the theoretical framework. The Non-linear Autoregressive Distributed Lag (NARDL) econometric methodology was deployed to examine the asymmetric effects of FDF on inflation dynamics. The paper found that FDF had asymmetric effects on inflation dynamics in Ghana as the positive outcome of FDF had a significant positive asymmetric effect of 29.0% on inflation while its negative outcome had a relatively less asymmetric effect of 22% on inflation dynamics, suggesting that consolidating fiscal policy was disinflationary. The paper finally recommends that fiscal authorities should adopt consolidating and prudent fiscal policies that could lead to fiscal solvency and sustainability, which could potentially moderate the effect of FDF on inflation dynamics.