EXTERNAL DEBT AND ECONOMIC GROWTH IN GHANA: A CO-INTEGRATION AND VECTOR ERROR CORRECTION ANALYSIS
EXTERNAL DEBT AND ECONOMIC GROWTH IN GHANA: A CO-INTEGRATION AND VECTOR ERROR CORRECTION ANALYSIS
Author(s): Shuffield Seyram Asafo, Adelajda MATUKASubject(s): Economy, National Economy
Published by: ASERS Publishing
Keywords: external debt; economic growth; economic development; Johansen Co-integration; time series models; Ghana;
Summary/Abstract: This paper employed a co-integration analysis and an error correction methodology to examine the impact of external debt on economic growth in Ghana using annual time series for the period 1970-2017. We found that external debt inflows spur growth in Ghana both in the long-run and short-run. Secondly, our study also confirmed the crowding out effect and the non-linear effect of external debt in the long run and short-run. However, debt overhang was only confirmed in the short-run. We advocate for a judicious allocation of the debt resources so that the cost of servicing the debt will not outweigh the benefit of the borrowed funds.
Journal: Theoretical and Practical Research in Economic Fields (TPREF)
- Issue Year: X/2019
- Issue No: 19
- Page Range: 45-53
- Page Count: 9
- Language: English
- Content File-PDF
