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.
Asafo S.S., Matuka A. (2019). EXTERNAL DEBT AND ECONOMIC GROWTH IN GHANA: A CO-INTEGRATION AND VECTOR ERROR CORRECTION ANALYSIS. THEORETICAL AND PRACTICAL RESEARCH IN ECONOMIC FIELDS, 10(1), 45-53 [10.14505/tpref.v10.1(19).05].
EXTERNAL DEBT AND ECONOMIC GROWTH IN GHANA: A CO-INTEGRATION AND VECTOR ERROR CORRECTION ANALYSIS
Matuka A.Secondo
2019
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.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
