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Investment and Growth Amidst Widening Government Debt: “The Ghanaian Storyâ€

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  • John Kwaku Mensah Mawutor
  • Eric Boachie Yiadom
  • Richard Fosu Amankwa

Abstract

The study revisits the debt-growth nexus and broadens the argument to examine the unique effect of government debt on investment in Ghana. Data from World Development Indicators on the Ghanaian economy were sampled from 1990 to 2015. The empirical results from the Multiple Linear Regression (MLR) suggest an inverse relationship between government debt and economic growth in Ghana. In addition, a percentage increase in government debt reduces investment by 0.65%; implying that government debt harms investment due to fungibility of debt and accompanying debt repayment responsibilities. Policy ramifications resulting from the study are that the Ghanaian government should restructure public debt management to eliminate debt fungibility and reduce debt to GDP ratio as well.

Suggested Citation

  • John Kwaku Mensah Mawutor & Eric Boachie Yiadom & Richard Fosu Amankwa, 2019. "Investment and Growth Amidst Widening Government Debt: “The Ghanaian Storyâ€," Asian Journal of Finance & Accounting, Macrothink Institute, vol. 11(1), pages 259271-2592, December.
    • Handle: RePEc:mth:ajfa88:v:11:y:2019:i:1:p:259271
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    References listed on IDEAS

    as
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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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