Determinants of Fiscal balance of Metropolitan, Municipal and District assemblies in Ghana

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MAY, 2016.
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The study employed a panel data analysis approach to examine fiscal balance in Districts/Municipalities in Ghana. The study examined specifically; the trend in internally generated funds (IGF), total transfers, fiscal balance, total revenue and total expenditure; the causes and determinants of fiscal balance in District/Municipalities in Ghana; and the causality between internally generated funds (IGF) and total transfers (TT). Panel data from ten (10) Districts/Municipal Assemblies in Ghana spanning from 2009 to 2014 was used for the analysis. Pooled and random effects estimates via panel data analysis approach are employed. The random effects showed that total transfers (TT), Population, and staff strength were the main drivers of fiscal balance of the selected ten (10) District/Municipals in Ghana. The pooled-OLS results showed that internally generated funds (IGF), population, and staff strength were the main determinants of fiscal balance for the ten (10) selected Assemblies in Ghana. The panel Granger causality test revealed bi-directional causality from internally generated funds (IGF) to total transfers (TT). The study concluded that inducing both internal and external revenue sources play a critical role in achieving fiscal balance in MMDAs.
A thesis presented to the Department of Economics, College of Humanities and Social Sciences in partial fulfilment of the requirement for the degree of Master of Science in economics.