The effect of crude oil price on domestic investment in Ghana

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September 2016
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This study investigated the effect of crude oil price level and volatility on domestic investment by applying the Autoregressive Distributed Lag (ARDL) model to the time series from 1970 to 2014. The results indicate that oil price level has a positive and statistically significant impact on domestic investment in the short-term and long-term. Oil price volatility has a negative and significant impact on domestic investment in the short-run and long-run. The Ghana National Petroleum Corporation (GNPC) should employ price hedging techniques in order to reduce the volatility of oil price changes while the deregulation of the downstream petroleum sector should be strengthened to ensure optimal oil price determination. Also, there should be increase in government credible spending on capital projects and Research and Development (R&D) that would encourage the discovery of least cost energy sources and reduce dependence on crude oil.
A thesis submitted to the Department of Economics, Kwame Nkrumah University of Science and Technology, in partial fulfillment of the requirements for the Award of Master's Degree of Science in Economics,