EXTERNAL DEBT AND ECONOMIC GROWTH IN GHANA: A CO-INTEGRATION AND VECTOR ERROR CORRECTION ANALYSIS

  • Shuffield Seyram ASAFO PhD candidate at the Department of Economics University of Macerata, Italy
  • Adelajda MATUKA PhD candidate at the Department of Economics University of Macerata, Italy

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.

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Published
2019-08-20
How to Cite
ASAFO, Shuffield Seyram; MATUKA, Adelajda. EXTERNAL DEBT AND ECONOMIC GROWTH IN GHANA: A CO-INTEGRATION AND VECTOR ERROR CORRECTION ANALYSIS. Theoretical and Practical Research in the Economic Fields, [S.l.], v. 10, n. 1, p. 45-53, aug. 2019. ISSN 2068-7710. Available at: <https://journals.aserspublishing.eu/tpref/article/view/3814>. Date accessed: 25 jan. 2022. doi: https://doi.org/10.14505//tpref.v10.1(19).05.