The Role of Fiscal Policy on Economic Growth A Study of Ghana: An Empirical Literature

Author(s)

Benjamin Blandful Cobbinah , Francis Atta Sarpong , Larsey Naphtali Akwetteh , Chidiebube Emmanuel Obodo ,

Download Full PDF Pages: 01-14 | Views: 542 | Downloads: 158 | DOI: 10.5281/zenodo.5588222

Volume 10 - September 2021 (09)

Abstract

The effectiveness of fiscal policy on emerging country economic growth is a hot topic of discussion. While adjusting the levels of public spending and determining tax rates, policymakers in developing countries strive to address socioeconomic concerns such as poverty, unemployment, hunger, bad investment, and illiteracy. The impact of fiscal policy on Ghana's economic growth is examined in this study. The study looked into and reviewed a variety of journals in order to provide this report on the roles, effects, and impacts of fiscal policy on Ghana's economic growth. The discrepancies in conclusions of the effect of fiscal policy measures on economic growth can be seen in the research mentioned above. Some studies have found that it has a favorable effect, while others have found that it has a detrimental effect. A few researchers have found that it has no effect. They also illustrate that there are disparities in public spending and tax revenues between countries, with one having a good influence and the other having a negative impact, and one or both having an impact and being effective. In terms of monetary and fiscal policies, fiscal policy boosted economic growth in certain countries while having the reverse effect in others. When government expenditure was channeled to productive and investment sectors with sustainable productivity, fiscal policy achieved its targeted economic growth objectives. According to the findings, despite its important role in welfare advancements, government consumption spending has been detrimental to economic growth; policymakers must analyze its composition in order for it to improve growth. Government consumption expenditures should be reduced through targeted measures. Expenditures that are likely to stifle private investment should be scrutinized as well.

Keywords

Fiscal Policy, Tax, Government Spending, Economic Growth, World Bank

References

       i.        Ocran K. Matthew (2009). Fiscal Policy and Economic Growth in South Africa. A paper presented at the Centre for the Study of African Economies “Conference on Economic Development in Africa”, St. Catherine‟s College, Oxford University, UK. March 22-24, 2009.

ii.      Momigliano, S. and Siviero, S. (2002). Appraising the Effects of the Budget on the Economy with an Econometric Model: The Italian Fiscal Adjustments in the Nineties, Banca d’Italia. http://www.bancaditalia.it/studiricerche/convegni/atti/fisc_policy/i/1.3_momigliano_and_siviero. pdf

iii.    Aryeetey E., Harrigan J. And Nissanke M. (2000). Economic Reforms in Ghana: The Miracle and the Mirage. Woeli Publishing Service, Accra; James Currey, Oxford and; Africa World Press, Trenton, NJ

iv.     Karikari, A. John (1995). Government and Economic Growth in Developing Nation: The Case of Ghana. Journal of Economic Development, Volume 20. http://www.jed.or.kr/full-text/20-2/6.pd

v.       Kusi, N. K. (1998). Tax Reform and Revenue Productivity in Ghana. African Economic Research Consortium, Nairobi – Kenya. http://www.aercafrica.org/documents/RP74.pdf

vi.     Fontana, G. (2009). The Transmission Mechanism of Fiscal Policy: A Critical Assessment of Current Theories and Empirical Methodologies. Journal of Post Keynesian Economics, 31 (4), 587-604. Retrieved from http://www.jstor.org/stable/27746869

vii.   Aghion, P., and Durlauf, S. eds. (2005). Handbook of economic growth. Elsevier. North Holland, Print

viii. Iashmi, P., and Kumar, S. (2012). Economic Growth and Impact of Service's Sector in India. International Journal of Business Management & Economic Research, 3(5).

ix.     Economic Growth" (2006). Collins Dictionary of Economics. London: Collins, 2006. Credo Reference. 9 Jan. 2007. Web. 25 Jan. 2013

x.       Hyman, N. David (1994). Economics. 3rd Edition Richard D. Irwin, Inc.

xi.     Gillis, M., Perkings D. H., Roemer, M. and Snodgrass, R. D. (1987). The Economics of Development. 2 nd Edition. W. W. Norton Company, New York.

xii.   Saad, Wadad and Kalakeck, Kamel (2009). The Nature of Government Expenditure and its Impact on Sustainable Economic Growth. Middle Eastern Finance and Economics, Euro Journals Publishing Inc., Issue 4. www.eurojournals.com/mefe_4_03.pdf

xiii. Todaro, Michael P. and Smith, Stephen C. (2003). 8th Edition. Economic Development. Pearson Education (Singapore) Pte Ltd

xiv. Reungsri, Thanapat (2010). The Impact of Public Infrastructure Investment on Economic Growth in Thailand. A Doctorate Thesis submitted to the School of Economics and Finance, Victoria University, Australia. http://eprints.vu.edu.au/15497/1/Thanapat_Reungsri.pd

xv.   Peacock, Alan T. and Shaw, G. K. (1974). 2nd Edition. The Economic Theory of Fiscal Policy. Allen and Unwin, London

xvi. Gillis, M., Perkings D. H., Roemer, M. and Snodgrass, R. D. (1987). The Economics of Development. 2 nd Edition. W. W. Norton Company, New York

xvii.                       Al-Shatti, A. S. (2014). The effect of fiscal policy on economic development in Jordan. International business research, 7(12), 67.

xviii.                     Sarangi, N., Bhanumurthy, N. R., & Abu-Ismail, K. (2015). Effectiveness of fiscal policy in Jordan: impact on growth, poverty and inequality. ESCWA.

xix. Sarwar, G., & Chaudhry, N. R. Impact of Fiscal Policy on Economic Growth in Pakistan.

xx.   Ahmed, Z. E. E. S. H. A. N. (2011). Fiscal policy and economic growth in Pakistan. International Journal of Research in Commerce, Economics and Management, 1(5), 14-18.

xxi. Dandan, M. M. (2011, February). Government expenditures and economic growth in Jordan. In International Conference on Economics and Finance Research, Singapore (Vol. 4, pp. 467-471).

xxii.                       Ali, S., Ahmad, N., & Khalid, M. (2010). The effects of fiscal policy on economic growth: empirical evidences based on time series data from Pakistan [with comments]. The Pakistan Development Review, 497-512.

xxiii.                     Abu Eida, Omar, (2015). Determinants of Foreign Direct Investment in the Palestinian Economy: An Econometric Study 1994-2012, Hebron University, Palestine.

xxiv.                      Macek, R., & Janků, J. (2015). The impact of fiscal policy on economic growth depending on institutional conditions. Acta academica karviniensia, 15(2), 95-107.

xxv.                        Morina, K. (2017). Fiscal policy and economic growth: the case of Southeast European Countries (Doctoral dissertation, Kolegji AAB).

xxvi.                      Adefeso, H. A., Hakeem, M., & Salawu, B. (2010). Fiscal policy and economic growth in nigeria: Testing the prediction of endogenous growth model. Journal of Economic Theory, 4(2), 37-43.

Cite this Article: