Consequential Effects of Budget Deficit on Economic Growth: Empirical Evidence from Ghana

Antwi, Samuel; Zhao, Xicang; Mills, Ebenezer Fiifi Emire Atta

doi:10.2139/ssrn.2550122

Cited by 10 publications

(12 citation statements)

References 18 publications

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“…Moreover, this result is in line with the general tenets of the endogenous growth literature which ostensibly emphasizes that FDI inflow into a developing economy goes to finance saving gaps, introduce superior, cutting-edge technology and managerial skills which ultimately impact positively on the recipient economy. While this finding is contrary to that of some earlier studies for Ghana (see e.g., Oteng-Abayie & Frimpong, 2006;Antwi, Atta-Mills, Atta-Mills, and Zhao, 2013), it is highly consistent with many others ( Asafu-Adjaye, 2005, andInsah, 2013, for Ghana;Kokko, 1994, for Mexico;Sjoholm, 1999, for Indonesia;Tian, Lin, & Lo, 2004, for China;Otto & Ukpere, 2014, for Nigeria;and Sharma & Abekah, 2008, for a panel of 47 African countries). The positive and statistically significant long-run impact of FDI on economic growth in Ghana can be justified on the fact that FDI, which hitherto was concentrated in the mining sector, has in recent times been channelled into more viable sectors of the economy.…”

Section: Empirical Results and Discussioncontrasting

confidence: 99%

Foreign Direct Investment, Trade Openness and Economic Growth in Ghana: An Empirical Investigation

Sakyi

Commodore

Opoku

2015

Journal of African Business

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This paper investigates the long-run impact of foreign direct investment and trade openness on economic growth in Ghana (1970Ghana ( -2011 within the framework of the endogenous growth literature. Adopting the autoregressive distributed lag bounds testing approach to cointegration the results suggest that the interaction of foreign direct investment and exports has been crucial in fostering growth, thus validating the famous Bhagwati hypothesis. From a policy oriented point of view, the study recommends the channeling of foreign direct investment to export-oriented sectors and the promotion of export-led growth strategies in long-term development plans.

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Section: Empirical Results and Discussioncontrasting

confidence: 99%

Foreign Direct Investment, Trade Openness and Economic Growth in Ghana: An Empirical Investigation

Sakyi

Commodore

Opoku

2015

Journal of African Business

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“…In the midst of the ongoing controversy regarding the relationship between fiscal deficit and economic growth, we find very little work on Ghana. Only a handful of studies (Larbi, ; Antwi et al ., ; Akosah, ; Nkrumah et al ., ; Kurantin, ) have investigated the subject within a Ghanaian context and most of these studies left a number of issues hanging. For instance, these studies focused only on the direct impact and the long‐run relationship between deficit and economic growth using Johansen cointegration and autoregressive distributed lag (ARDL) models which do not account for threshold effects.…”

Section: Literature Reviewmentioning

confidence: 98%

Optimal Deficit Financing in a Constrained Fiscal Space in Ghana

Alagidede¹,

Mensah²,

Ibrahim³

2018

African Development Review

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Ghana's public debt has been on the rise in recent years, raising questions of fiscal sustainability. At the same time prices of Ghana's main commodities such as crude oil, gold and cocoa have not fared well in world markets. Coupled with an underdeveloped financial system and weak domestic revenue mobilization capacity, the higher public debt levels pose a significant challenge to macroeconomic stability, and long-run economic growth. This study contributes to a better understanding of the growth effects of high fiscal deficit in Ghana. We employ annual data spanning 1967-2013 and a sample splitting approach to examine the threshold level of Ghana's fiscal deficit and its impact on the country's economic growth. Our finding reveals an optimal fiscal deficit of 7.6 per cent of GDP. We find that the impact on economic growth of fiscal deficit is negative regardless of the sample splitting. However, our evidence shows that this effect is only statistically significant above the threshold. Although, the impact of fiscal deficit on growth is less clear and debatable, we document that fiscal deficit significantly hurts growth when the level exceeds the threshold. We discuss key implications for policy. Note 1. Results from our unit root tests (Augmented Dickey-Fuller and Phillips-Perron tests) also show that all the variables are stationary after first difference. The results are available upon request from the authors.

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“…Kuliavienė & Solnyškinienė (2014), Moraru (2013), Sandalcilar & Altiner (2012), Ruplienė & Garšvienė (2008) observed that the impact of FDI on advances in technology in the state depended greatly on the state's economic regulation (particularly concerning the regulation of labor and financial markets). A divergent relationship between FDI and economic growth was analyzed by Antwi, Atta Mills, Atta Mills & Zhao (2013). The authors highlighted that a negative impact of FDI surfaces in cases where local producers lose their position in the market, where companies in a particular sector increase, and where the capital earned from investments outflows from the state in which the investments have been made.…”

Section: Source: Authorsmentioning

confidence: 99%

The Evaluation of Impact of Municipalities' Fiscal Competitiveness on Economic Growth

Ruplienė¹,

Garšvienė

Rudytė

et al. 2017

CBUP

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Abstract:The competition between municipalities is problematic due to a common misconception that rivalry is impossible because documents regulating finances are the same across all local self-governments. In contrast, scientific research shows that the livability of one municipality can differ to another because of differences in their social-economic benefits. This distinction is not conditioned by geographic location or other special features of the municipality but rather by the amount of funds assigned and allocated to social and public welfare. This article aims to reveal the factors pertaining to the municipalities' fiscal competitiveness that affect economic growth within the state. This has relevance as a reallocation of a municipality's expenditure could provide new possibilities towards increasing future revenue of the municipality. For reaching the aim is examined by evaluating the effect of municipalities' fiscal competitiveness on Lithuania's economic growth using the volume and structure of expenditure in its municipalities. Results show that the major channels determining the fiscal competitiveness of a region are human resources, the business sector, and the institutional environment, and that these differ among municipalities. JEL Classification Numbers: H75, H76, R50; DOI: http://dx.doi.org/10.12955/cbup.v5.958

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Consequential Effects of Budget Deficit on Economic Growth: Empirical Evidence from Ghana

Cited by 10 publications

References 18 publications

Foreign Direct Investment, Trade Openness and Economic Growth in Ghana: An Empirical Investigation

Foreign Direct Investment, Trade Openness and Economic Growth in Ghana: An Empirical Investigation

Optimal Deficit Financing in a Constrained Fiscal Space in Ghana

The Evaluation of Impact of Municipalities' Fiscal Competitiveness on Economic Growth

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