The Role of Fiscal Policy in the Development of the Ghanaian Economy

Mabel Addai,Ekua Baiden-Amissah Bentsiwaa,Ebenmelu Chidiebere Blessing,Oguejiofor Uchenna Felicia,Elsie Odame-Amoah

doi:10.4236/ojbm.2022.102043

Mabel Addai, Ekua Baiden-Amissah Bentsiwaa + Show 3 more

Open Access

https://doi.org/10.4236/ojbm.2022.102043

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Abstract

The purpose of this research was to review the influence or effect of fiscal policies on Ghana’s development based on a survey of the available literature. This was accomplished by conducting a systematic internet search using an array of keywords—fiscal policy, fiscal policy in Ghana, challenges of fiscal policy in Ghana, challenges of fiscal. We find that there is a large body of empirical research on the impact of fiscal policy on growth in Ghana, with varied results based on cross-sectional, time-series, and panel data. The economy benefited from government investments, transfer payments, and tax income, while government consumption had a negative impact.

Highlights

Traditional Keynesian macroeconomic arguments regarding economic development have focused on monetary policy, economic structure, and fiscal policy of economic outcomes (Agbobli et al, 2019)
The literature about the impact of fiscal policy on growth in Ghana has generated a large volume of empirical studies with mixed findings using cross-sectional, time series, and panel data (Ogeh, Harvey, & Hagan, 2008)
In a study, using time series data over the period 1983 to 2012 to analyze the influence of fiscal policy on Ghana’s economic growth (20), it was discovered that government investments, government transfer payments, and tax income had a positive impact on the economy, government consumption had a negative impact

Summary

Introduction

Traditional Keynesian macroeconomic arguments regarding economic development have focused on monetary policy, economic structure, and fiscal policy of economic outcomes (Agbobli et al, 2019). In their study in 2014 to gauge fiscal policy’s impact on the Ghanaian economy, (Havi & Enu, 2014) stressed fiscal policy as possessing an effect in the long term They discovered that government investments and transfer payments had a beneficial impact on economic growth, but taxes and government consumption expenditures had a negative impact. The concept of fiscal policy dominates recent policy deliberations of most economies, especially about issues of economies and fiscal issues relating to employment, insufficient national savings, budget deficit among others, (Matallah, 2017) It encapsulates strategic efforts by governments in the areas of spending money and taxes to impact macroeconomic variables desirable, (ibid). In terms of average GDP growth, the trends in output growth during these two decades did not differ significantly (Akosah, 2013)

Fiscal Policy Challenges for Emerging Economies like Ghana

Empirical Critique

Findings

Conclusion, Limitations & Recommendations