n IFE PsychologIA : An International Journal - Long-term growth and fiscal development policies : the Ghanaian experience

Volume 11, Issue 1
  • ISSN : 1117-1421



The 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 steadygrowth rate of output becomes endogenous and is influenced by government policies. <br>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. <br>In particular, under the necessary assumptions, the following are found to be growth-promoting:&lt;ul&gt; &lt;li&gt; increase in tax-to-GDP ratio; &lt;/li&gt; &lt;li&gt; reduction in current expenditure-to-GDP ratio; &lt;/li&gt; &lt;li&gt; the reorientation of expenditures in favour of basic infrastructure, maintenance, education and health&lt;/li&gt;; &lt;li&gt; reduction in fiscal deficit-to-GDP ratio.&lt;/li&gt;&lt;/ul&gt;

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