Abstract:
Government spending plays an essential role in determining the changes in the level
of national income; providing the necessities for potential output and sustaining the
wellbeing of the economy. Thus, government spending on goods and services
contribute to the productive potential of an economy. This study employed
exploratory causal study design to assess the impact of government spending on
economic growth within the context of Ghanaian economy. The study use annual time
series spanning from 1970 to 2018. Data was collected from World Development
Indicators (WDI). The study tested for unit root and co-integration to ascertain the
existence of long run relationship among the variables. Based on the result of the unit
root test, ARDL model was adopted. The result indicated that there exist both long
run and short run relationship among the variables. Also, it was found that in the long
run total government expenditure negatively affect economic growth. It was further
realized that foreign aid and exchange rate negatively related to economic growth in
the long run. Gross fixed capital formation, inflation and trade openness positively
affect economic growth in the long run. It was also found that most of the short run
results were consistent with the long run results. The findings also shown that there is
bi-directional causal relationship between government expenditure and economic
growth. The model for the study is free of serial correlation and heteroscedaticity and
the model was stable over time as confirmed by cumulative sum (CUSUM) and
CUSUMSQ results.
Description:
A dissertation in the Department of Economics Education,
Faculty of Social Sciences, Submitted to the School of
Graduate Studies, in partial fulfillment
of the requirements for the award of the degree of
Master of Science
(Economics Education)
In the University of Education, Winneba
DECEMBER, 2020
