Abstract:
This study revisits the relationship between external debt and economic
growth in Ghana. Using annual data for the period 1986 to 2015, and applying
Autoregressive Distributed Lag (ARDL) model and in line with the empirical
literature, the study found a statistically significant positive relationship
between external debt and economic growth in both the long run and short run
for Ghana. The study also revealed that there was adjustment to equilibrium
from the short-run. Besides, consistent with the endogenous growth
predictions, the study found evidence between economic growth and external
debt. The study, therefore, recommends that the government should
strategically deepen the external debt of the economy in order to stimulate
economic growth in Ghana.
