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Please use this identifier to cite or link to this item: http://hdl.handle.net/123456789/5164

Title: The Impact of External Debt on Economic Growth in Ghana: A Cointegration Analysis
Authors: Frimpong, J.M.
Oteng-Abayie, E.F.
Keywords: external debt.
debt servicing
economic growth
Unit roots
Issue Date: Dec-2006
Publisher: Journal of Science and Technology
Citation: Journal of Science and Technology, Vol. 26 No. 3, 2006 pp 122-131
Abstract: A plethora of both cross-country and country-specific studies have been undertaken to estimate the impact of external debt on growth in developing countries. Their general findings though revealing need to be confirmed in Ghana. This paper estimates empirically the impact of external debt an economic growth in Ghana to determine the existence of a ‘debt overhang' and/or ’crowding out’ effects for the period 1970 to 1999. We used the ADF, PP and KPSS tests for unit roots and the Johansen-Juselius multivariate approach to cointegration to test for stationarity and a long-run relationship among variables. A vector error correction model (VECM) was used to estimate the short-run impacts. The results indicate that GDP growth is influenced positively by external debt inflows and negatively by debt servicing revealing the presence of a ‘crowding out effect’. An indication of a ‘debt overhang effect' is also found through the negative impact of domestic investment.
Description: Article published in the Journal of Science and Technology, Vol. 26 No. 3, 2006 pp 122-131
URI: http://hdl.handle.net/123456789/5164
Appears in Collections:Journal of Science and Technology 2000-

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