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External Debt And Economic Growth In Ghana: A Co-Integration And Vector Error Correction Analysis

Author

Listed:
  • Shuffield 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.

Suggested Citation

  • Shuffield ASAFO & Adelajda MATUKA, 2019. "External Debt And Economic Growth In Ghana: A Co-Integration And Vector Error Correction Analysis," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 10(1), pages 45-53.
  • Handle: RePEc:srs:jtpref:v:10:y:2019:i:1:p:45-53
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