Time Series Modeling and Forecasting GDP in the Ghanaian Economy

Abstract

In this research, empirical modeling of the Ghanaian GDP was done by using the Box-Jenkins model which is also known as the Autoregressive Integrated Moving Average model (ARIMA). We followed the 4 steps involved in using this model which include model identification, estimation of parameters, diagnostic checking and finally, model use (or forecasting). The analysis was carried out by using the GDP data of Ghana from 1970-2014. We found an original result by discovering an ARIMA (0; 1; 0) process modeling this GDP data. Next, we made forecast of the GDP of Ghana for the period 2015-2020 and compared the forecast values with that of Ghana Statistical service and other international forecasting organizations. The result from the forecast revealed that the GDP of Ghana is mostly influenced by external factors and may experience an increase for the period 2015-2020.

Keywords: Gross Domestic Product (GDP), stationarity, invertibility, Box-Jenkins, auto-regressive.