Does government debt promote economic growth? New empirical evidence from Ghana
by Samuel Tawiah Baidoo; Emmanuel Duodu; Evans Kwarteng; Grace Boatemaa; Linda Opoku; Alex Antwi; Raphael Appiah Akomeah
International Journal of Public Sector Performance Management (IJPSPM), Vol. 7, No. 2, 2021

Abstract: The importance of infrastructural projects by governments cannot be overemphasised as far as economic growth and development are concerned. Though these projects could be financed by generated revenues, this has often not been the case in most developing countries due to lower revenue which in turn leads to huge spending gaps. As a result, governments of developing economies have resorted to both internal and external borrowing to finance such projects. However, this approach to financing these projects is expected to have influence on economies. This study therefore revisits past studies and provides new empirical evidence regarding government debt and economic growth nexus. Using annual time series data from 1980 to 2017 on Ghana, the study employs the autoregressive distributed lag model for analysis. The results show among others that government debt exerts negative influence on economic growth. Based on the findings, vital policy implications have been provided.

Online publication date: Thu, 08-Apr-2021

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