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Investigating Institutional and Expenditure Patterns on Debt and Economic Growth in Ghana

Author

Listed:
  • Klenam Kofi Sedegah

    (Berekuso, Ghana)

  • Richard Kwabi Ayisi

    (Accra, Ghana)

  • Wassiuw Abdul-Rahaman

    (Accra, Ghana)

  • William Baah-Boateng

    (Accra, Ghana)

Abstract

This study investigates the influence of government expenditure and institutions on public debt accumulation and economic growth in Ghana between 1990 and 2019. The paper examines how public debt is utilized for government spending on capital and recurrent expenditure, and the role bureaucratic quality plays in improving economic growth. The employed estimation technique is structural equation modelling (SEM) because it effectively assesses complex situations and allows modelling complex systems by utilizing simultaneous equations, mediator analysis, and modification indices to improve the goodness of fit of a model. The study indicates that public debt negatively affects GDP growth, while trade openness positively influences GDP growth and public debt accumulation. Bureaucratic quality impacts GDP growth positively and capital expenditure negatively. Recurrent expenditure positively predicts GDP growth and capital expenditure. Capital expenditure's effect on GDP growth is negative but statistically insignificant. The right checks and balances should be implemented to mitigate rent- seeking and corrupt activities associated with bureaucratic quality. Tax revenue mobilization should be improved to reduce budget deficit and borrowing, while export should be promoted through improving local industries. Finally, all infrastructural projects must be completed to serve their purpose.

Suggested Citation

  • Klenam Kofi Sedegah & Richard Kwabi Ayisi & Wassiuw Abdul-Rahaman & William Baah-Boateng, 2024. "Investigating Institutional and Expenditure Patterns on Debt and Economic Growth in Ghana," Journal of Africa SEER Centre(ASC) 24/008, Africa SEER Centre(ASC).
    • Handle: RePEc:dbm:wpaper:24/008
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    References listed on IDEAS

    as
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