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Please use this identifier to cite or link to this item: http://hdl.handle.net/123456789/11264

Title: Wagner or Keynes for Ghana Government Expenditure and Economic Growth Dynamics. A ‘VAR’ Approach
Authors: Kamasa, Kofi
Ofori-Abebrese, Grace
Keywords: Granger causality
Unit root
Government Expenditure
GDP growth
Issue Date: 2015
Publisher: Journal of Reviews on Global Economics
Citation: Journal of Reviews on Global Economics, 2015, 4, 177-183
Abstract: This paper analysed empirically the causal relationship between government expenditure growth and GDP growth in Ghana from 1980 – 2010. The study employed vector autoregressive (VAR)/Granger causality analysis developed by Sims (1980) and Granger (1969). The cointegration results provided evidence of a unique cointegrating vector. Granger causality test conducted revealed that causality exist only from GDP growth to government expenditure growth and not the vice versa. This implication supports Wagner’s law of expanding state activities for Ghana. This result means that in estimating government expenditure, GDP growth must be taken into account so as to avoid the problem of misspecification and biasness of estimates generated. The findings also suggest that government must focus on policies that would create the enabling environment for growth to thrive rather than increasing its expenditure with the aim of increasing GDP growth.
Description: Article published in the Journal of Reviews on Global Economics, 2015
URI: http://hdl.handle.net/123456789/11264
ISSN: 1929-7092/15
Appears in Collections:College of Arts and Social Sciences

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