The Effects of Fiscal Policy on Ghanaian Economy

Abstract

As part of the Government role in formulating and implementing policies that drives economic output, the need to examine whether or not these policies affect economic growth is useful and timely. The study was conducted by regressing economic output on four fiscal variables such as: government consumption expenditure, taxes, and government investment expenditure and government transfers whilst private investments, labour force and terms of trade as the non-fiscal variables. The analyses were based on time series data covering the period of 1980-2016. The study applies the Dickey-Fuller test for stationary and bounds test approach to cointegration for the estimation of an autoregressive distributed lag model. The result shows that in the long-run government investments and government expenditure affect economic growth positively.

Keywords: Expenditure, Growth, Fiscal policy; Budget; Government spending; GDP

DOI: 10.7176/EJBM/11-26-14

Publication date:September 30^th 2019