Long-Term Growth and Fiscal Development Policies: The Ghanaian Experience
AbstractThe article aims at clarifying the relationship between long-term growth and fiscal policy variables. Growth equations are derived from a structural macroeconomic model. The model developed here postulates that the steady-growth rate of output becomes endogenous and is influenced by government policies. The regression analysis finds that a large part of economic growth performance is related to the extent of favourable economic openness and the quality of fiscal policies. In particular, under the necessary assumptions, the following are found to be growth-promoting: - increase in tax-to-GDP ratio; - reduction in current expenditure-to-GDP ratio; - the reorientation of expenditures in favour of basic infrastructure, maintenance, education and health; - reduction in fiscal deficit-to-GDP ratio.
(IFE PsychologIA: 2003 11 (1): 36-45)