Government Stability in the Remittance-Economic Growth Link in Ghana
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International Journal of Applied Economics, Finance and Accounting
Abstract
Several studies have revealed that many factors affect economic growth.
Remittances and government stability have been identified as two of these
factors. Over the years, remittances have become a major source of
financial inflows, especially in Ghana. This study examines the role of
government stability in the remittance-economic growth relationship in
Ghana. Annual time series data from 1984 to 2020 was extracted from
the World Development Indicators (WDI) and the International Country
Risk Guide (ICRG). An ARDL model with a level structural break was
estimated. The results show, first, that a cointegration relationship exists
among the variables in the presence of structural breaks. Secondly,
remittances and government stability have a significant, positive long-run
impact on economic growth, while there is no significant impact of GDPPC and
government stability on remittances was found. Thirdly, in the short run,
remittances and government stability are not significantly associated with
growth. The role of remittances in the economic growth of Ghana
important. When remittances increase, economic growth will likewise
increase. Government policy-making should create an enabling
environment to channel remittances into productive uses, including
entrepreneurial ventures. Remittances must be received through proper
channels for easy accountability, and government stability should be
complemented by good governance to further foster economic growth.
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Research Article