Journal of economics and public finance, Aug 22, 2022
This study examines how the district assemblies' common fund grant is distributed among the local... more This study examines how the district assemblies' common fund grant is distributed among the local governments in Ghana to ascertain the objectivity of the sharing formula scheme created under the 1992 Constitution. The dynamic GMM panel estimation approach is employed for the empirical analysis with focus on new versus mature democracy and how swing and aligned districts tend to benefit from the distribution. Annual data on the fund disbursements and the election outcomes from 1994 to 2018 for 216 district assemblies is used. The findings reveal that average transfers to each district was GhȻ7.54 million which generally increased by 9.4 percent in election years reflecting the opportunistic behavior of incumbent governments. Swing districts benefited more from the increase than non-swing districts, as the former received 4.3 percent more than the latter. Aligned districts in new democracy received, 2 percent more than non-aligned ones, while it was 4.3 percent more for swing districts in mature democracy. Therefore, the allocation formula is subject to political manipulations hence it is recommended that the unilateral appointment of the fund's administrator by incumbent Presidents be reviewed in addition to creating autonomous public agencies to be responsible for the allocation formula and the fund administration independently.
In public finance, two important measures that have been used to assess the efficiency of any tax... more In public finance, two important measures that have been used to assess the efficiency of any tax system in terms of its mobilization capacity are tax buoyancy total response of tax revenue to changes in national income and discretionary changes in tax policy over time; and tax elasticity automatic response of tax revenue to GDP changes less the discretionary tax changes. In this study, we used the Dummy Variable Technique to control for effects of the Discretionary Tax Measures on Historical Time Series Data for the period 1970-2007 to estimate the elasticity of the Ghanaian tax system. Our findings revealed that the overall tax system in Ghana was buoyant and elastic in the long run and buoyancy exceeded the elasticity, but in the short run the reverse was the case. We also observed an improvement in both buoyancy and elasticity over the reform period (1985-2007) as evidenced in pre-reform buoyancy and elasticity coefficient which were generally less than unity but became greater ...
The role of agriculture in Ghana’s economic development cannot be overstated as it is a major con... more The role of agriculture in Ghana’s economic development cannot be overstated as it is a major contributor to GDP and employs more people in the rural areas thereby improving on their welfare. However, the sector’s performance in recent time has declined as poverty incidence has remained high among rural agriculture households. This study, therefore, examines how participation in agriculture activities impact households’ welfare in Ghana using the seventh edition of Ghana Living Standard Survey (GLSS) dataset conducted in 2016/2017. The Heckman probit model is applied to determine the drivers of households' probability of engaging in agriculture. The propensity scores matching technique is used to match the farming households to their replica non-farming households as counterfactuals to ascertain the welfare impact of the households. The result shows that the welfare of households in agriculture is multidimensionally deprived than non-agriculture households. In addition, factors ...
This study is aimed at determining the benefits or otherwise of the bailout made to states by the... more This study is aimed at determining the benefits or otherwise of the bailout made to states by the federal government of Nigeria. It sought to answer the questions of whether the bailout was a reward to inefficiency and/or depleted the federal government revenue base without any potential benefits; if it followed any prudent public policy principles in Nigeria or not; and extent to which the bailout package has resolve the state fiscal crisis and its effect on state governments' internal revenue bases. With data sourced from the Central Bank of Nigeria, Federal Ministry of Finance, and other sources, content analysis was employed which led to the computation of the fiscal sustainability index of each of the states of the federation. Based on the sustainability index, the interpolation of financial data of government revenue revealed that a gap between revenue and expenditure should not be immediately fed by debt, especially where there are other sources of revenue available to state governments. Hence, when a state is still fiscally sustainable, an option of debt is not practicable. A conclusion of the study is that ethically, problem solving via bailout funds may be costlier than estimated benefits.
Governments need accurate tax revenue forecast figures for good economic planning but there seems... more Governments need accurate tax revenue forecast figures for good economic planning but there seems to be no consensus on which method is the most suitable to deliver reliable results leading to differences in the choice of technique from one country to another. This study therefore forecasts Ghana’s Value Added Tax (VAT) Revenue by comparing two methods, ARIMA with Intervention and Holt linear trend methods to establish the one with more precise predictive powers for VAT Revenue. Monthly VAT revenue data from the year 2002 to 2019 is used in the analysis. The findings show that ARIMA with Intervention method outperformed the Holt linear trend model in terms of accuracy and precision. A comparison of predicted results from the ARIMA with intervention model from 2017 to 2019 with Ghana Revenue Authority’s VAT revenue targets based on their in-house forecasting model for the same period reveals that the ARIMA with intervention approach performs better than the in-house forecasting model...
Governments need accurate tax revenue forecast figures for good economic planning but there seems... more Governments need accurate tax revenue forecast figures for good economic planning but there seems to be no consensus on which method is the most suitable to deliver reliable results leading to differences in the choice of technique from one country to another. This study therefore forecasts Ghana’s Value Added Tax (VAT) Revenue by comparing two methods, ARIMA with Intervention and Holt linear trend methods to establish the one with more precise predictive powers for VAT Revenue. Monthly VAT revenue data from the year 2002 to 2019 is used in the analysis. The findings show that ARIMA with Intervention method outperformed the Holt linear trend model in terms of accuracy and precision. A comparison of predicted results from the ARIMA with intervention model from 2017 to 2019 with Ghana Revenue Authority’s VAT revenue targets based on their in-house forecasting model for the same period reveals that the ARIMA with intervention approach performs better than the in-house forecasting model...
This paper makes an attempt to examine whether the ‘pecking order theory’ could explain dividend ... more This paper makes an attempt to examine whether the ‘pecking order theory’ could explain dividend payout ratio in Ghana by analyzing the linkages, if any, between financial leverage, dividend payout ratio and corporate investment among listed firms in Ghana. Using data derived from financial statements of 33 out of 34 listed firms on the Ghana Stock Exchange for the period 2004 to 2009 and applying the Three Stage Least Square Technique to test the predictions in Ghana, the paper reveals that there is a positive significant interaction between financial leverage and dividend payout ratio among the listed firms in Ghana. The paper further indicates that profitability has the predicted negative influence on financial leverage, indicating that somewhat, the pecking order theory explains dividend payout ratio in Ghana but the ratio is very low. However, the paper did not show any significant relationship between financial leverage and investment as well as investment and dividend payout ...
Cocoa farmers face many drawbacks to their socioeconomic progress. A vivid example is the cocoa s... more Cocoa farmers face many drawbacks to their socioeconomic progress. A vivid example is the cocoa swollen shoot virus disease (CSSVD) which has caused mass destruction to many cocoa-growing areas like the Western North Region, where a larger portion of over 60% of Ghana's cocoa was produced. This study set out to find the effect of the CSSVD on the living standards of cocoa farmers in Ghana. A structured questionnaire was administered to elicit information from all 386 cocoa farming households of the study community in the study area, the epicenter of the disease. The study employed a Multidimensional Poverty Index as a measure of the farmers' welfare and estimated the simultaneous equation tobit model (Newey's two-step estimation) to find the socioeconomic implication of the disease on the cocoa farmers. The outcome of the study indicates that the CSSV disease as the main variable significantly affects the living standards of the cocoa farming households multidimensionally. This implies that the disease's incidence reduces crop yield leading to low resources, thereby adversely affecting households' welfare. Occupational diversity, educational level of the household head, knowledge of the disease, cocoa land size, households that had migrated to the study area, those that employ an external labour force, the log of household's expenditure, number of household members, age of households' head, access to farm water and participation off-farm activities were statistically significant on the depth of multidimensional poverty of the households. As policy measures, formal education and education on the disease's awareness should be intensified through frequent engagement with agriculture extension officers who will teach the farmers how to handle the disease. As a measure to alleviate multidimensional poverty, the use of external labour force should be encouraged for large-scale production. Finally, cocoa farmer households are to diversify to mitigate the impact of crop disease.
This study has been prepared within the UNU-WIDER project on 'The economics and politics of taxat... more This study has been prepared within the UNU-WIDER project on 'The economics and politics of taxation and social protection'.
Purpose The purpose of this paper is to examine the effects of political influences on fiscal tra... more Purpose The purpose of this paper is to examine the effects of political influences on fiscal transfers from the central government to district assemblies in Ghana. Design/methodology/approach It adopted a redistributive politics model and estimated the two-step system generalized method of moment using electoral outcomes, and transfers data for 167 districts which were classified into swing and aligned, from 1994 to 2014. Findings The findings reveal that Gh₵6.28m on average was transferred to each district annually, which tend to increase by 8.4 percent in election years. Further, the swing districts received 5.2 percent more than the aligned districts. Practical implications The sharing mechanism is significantly influenced by political considerations as there exists a political budget cycle and a general dominance of swing effects. Social implications The fiscal transfer system disregards the social principles of fairness and efficiency. Therefore, a wider consultative process i...
Journal of economics and public finance, Aug 22, 2022
This study examines how the district assemblies' common fund grant is distributed among the local... more This study examines how the district assemblies' common fund grant is distributed among the local governments in Ghana to ascertain the objectivity of the sharing formula scheme created under the 1992 Constitution. The dynamic GMM panel estimation approach is employed for the empirical analysis with focus on new versus mature democracy and how swing and aligned districts tend to benefit from the distribution. Annual data on the fund disbursements and the election outcomes from 1994 to 2018 for 216 district assemblies is used. The findings reveal that average transfers to each district was GhȻ7.54 million which generally increased by 9.4 percent in election years reflecting the opportunistic behavior of incumbent governments. Swing districts benefited more from the increase than non-swing districts, as the former received 4.3 percent more than the latter. Aligned districts in new democracy received, 2 percent more than non-aligned ones, while it was 4.3 percent more for swing districts in mature democracy. Therefore, the allocation formula is subject to political manipulations hence it is recommended that the unilateral appointment of the fund's administrator by incumbent Presidents be reviewed in addition to creating autonomous public agencies to be responsible for the allocation formula and the fund administration independently.
In public finance, two important measures that have been used to assess the efficiency of any tax... more In public finance, two important measures that have been used to assess the efficiency of any tax system in terms of its mobilization capacity are tax buoyancy total response of tax revenue to changes in national income and discretionary changes in tax policy over time; and tax elasticity automatic response of tax revenue to GDP changes less the discretionary tax changes. In this study, we used the Dummy Variable Technique to control for effects of the Discretionary Tax Measures on Historical Time Series Data for the period 1970-2007 to estimate the elasticity of the Ghanaian tax system. Our findings revealed that the overall tax system in Ghana was buoyant and elastic in the long run and buoyancy exceeded the elasticity, but in the short run the reverse was the case. We also observed an improvement in both buoyancy and elasticity over the reform period (1985-2007) as evidenced in pre-reform buoyancy and elasticity coefficient which were generally less than unity but became greater ...
The role of agriculture in Ghana’s economic development cannot be overstated as it is a major con... more The role of agriculture in Ghana’s economic development cannot be overstated as it is a major contributor to GDP and employs more people in the rural areas thereby improving on their welfare. However, the sector’s performance in recent time has declined as poverty incidence has remained high among rural agriculture households. This study, therefore, examines how participation in agriculture activities impact households’ welfare in Ghana using the seventh edition of Ghana Living Standard Survey (GLSS) dataset conducted in 2016/2017. The Heckman probit model is applied to determine the drivers of households' probability of engaging in agriculture. The propensity scores matching technique is used to match the farming households to their replica non-farming households as counterfactuals to ascertain the welfare impact of the households. The result shows that the welfare of households in agriculture is multidimensionally deprived than non-agriculture households. In addition, factors ...
This study is aimed at determining the benefits or otherwise of the bailout made to states by the... more This study is aimed at determining the benefits or otherwise of the bailout made to states by the federal government of Nigeria. It sought to answer the questions of whether the bailout was a reward to inefficiency and/or depleted the federal government revenue base without any potential benefits; if it followed any prudent public policy principles in Nigeria or not; and extent to which the bailout package has resolve the state fiscal crisis and its effect on state governments' internal revenue bases. With data sourced from the Central Bank of Nigeria, Federal Ministry of Finance, and other sources, content analysis was employed which led to the computation of the fiscal sustainability index of each of the states of the federation. Based on the sustainability index, the interpolation of financial data of government revenue revealed that a gap between revenue and expenditure should not be immediately fed by debt, especially where there are other sources of revenue available to state governments. Hence, when a state is still fiscally sustainable, an option of debt is not practicable. A conclusion of the study is that ethically, problem solving via bailout funds may be costlier than estimated benefits.
Governments need accurate tax revenue forecast figures for good economic planning but there seems... more Governments need accurate tax revenue forecast figures for good economic planning but there seems to be no consensus on which method is the most suitable to deliver reliable results leading to differences in the choice of technique from one country to another. This study therefore forecasts Ghana’s Value Added Tax (VAT) Revenue by comparing two methods, ARIMA with Intervention and Holt linear trend methods to establish the one with more precise predictive powers for VAT Revenue. Monthly VAT revenue data from the year 2002 to 2019 is used in the analysis. The findings show that ARIMA with Intervention method outperformed the Holt linear trend model in terms of accuracy and precision. A comparison of predicted results from the ARIMA with intervention model from 2017 to 2019 with Ghana Revenue Authority’s VAT revenue targets based on their in-house forecasting model for the same period reveals that the ARIMA with intervention approach performs better than the in-house forecasting model...
Governments need accurate tax revenue forecast figures for good economic planning but there seems... more Governments need accurate tax revenue forecast figures for good economic planning but there seems to be no consensus on which method is the most suitable to deliver reliable results leading to differences in the choice of technique from one country to another. This study therefore forecasts Ghana’s Value Added Tax (VAT) Revenue by comparing two methods, ARIMA with Intervention and Holt linear trend methods to establish the one with more precise predictive powers for VAT Revenue. Monthly VAT revenue data from the year 2002 to 2019 is used in the analysis. The findings show that ARIMA with Intervention method outperformed the Holt linear trend model in terms of accuracy and precision. A comparison of predicted results from the ARIMA with intervention model from 2017 to 2019 with Ghana Revenue Authority’s VAT revenue targets based on their in-house forecasting model for the same period reveals that the ARIMA with intervention approach performs better than the in-house forecasting model...
This paper makes an attempt to examine whether the ‘pecking order theory’ could explain dividend ... more This paper makes an attempt to examine whether the ‘pecking order theory’ could explain dividend payout ratio in Ghana by analyzing the linkages, if any, between financial leverage, dividend payout ratio and corporate investment among listed firms in Ghana. Using data derived from financial statements of 33 out of 34 listed firms on the Ghana Stock Exchange for the period 2004 to 2009 and applying the Three Stage Least Square Technique to test the predictions in Ghana, the paper reveals that there is a positive significant interaction between financial leverage and dividend payout ratio among the listed firms in Ghana. The paper further indicates that profitability has the predicted negative influence on financial leverage, indicating that somewhat, the pecking order theory explains dividend payout ratio in Ghana but the ratio is very low. However, the paper did not show any significant relationship between financial leverage and investment as well as investment and dividend payout ...
Cocoa farmers face many drawbacks to their socioeconomic progress. A vivid example is the cocoa s... more Cocoa farmers face many drawbacks to their socioeconomic progress. A vivid example is the cocoa swollen shoot virus disease (CSSVD) which has caused mass destruction to many cocoa-growing areas like the Western North Region, where a larger portion of over 60% of Ghana's cocoa was produced. This study set out to find the effect of the CSSVD on the living standards of cocoa farmers in Ghana. A structured questionnaire was administered to elicit information from all 386 cocoa farming households of the study community in the study area, the epicenter of the disease. The study employed a Multidimensional Poverty Index as a measure of the farmers' welfare and estimated the simultaneous equation tobit model (Newey's two-step estimation) to find the socioeconomic implication of the disease on the cocoa farmers. The outcome of the study indicates that the CSSV disease as the main variable significantly affects the living standards of the cocoa farming households multidimensionally. This implies that the disease's incidence reduces crop yield leading to low resources, thereby adversely affecting households' welfare. Occupational diversity, educational level of the household head, knowledge of the disease, cocoa land size, households that had migrated to the study area, those that employ an external labour force, the log of household's expenditure, number of household members, age of households' head, access to farm water and participation off-farm activities were statistically significant on the depth of multidimensional poverty of the households. As policy measures, formal education and education on the disease's awareness should be intensified through frequent engagement with agriculture extension officers who will teach the farmers how to handle the disease. As a measure to alleviate multidimensional poverty, the use of external labour force should be encouraged for large-scale production. Finally, cocoa farmer households are to diversify to mitigate the impact of crop disease.
This study has been prepared within the UNU-WIDER project on 'The economics and politics of taxat... more This study has been prepared within the UNU-WIDER project on 'The economics and politics of taxation and social protection'.
Purpose The purpose of this paper is to examine the effects of political influences on fiscal tra... more Purpose The purpose of this paper is to examine the effects of political influences on fiscal transfers from the central government to district assemblies in Ghana. Design/methodology/approach It adopted a redistributive politics model and estimated the two-step system generalized method of moment using electoral outcomes, and transfers data for 167 districts which were classified into swing and aligned, from 1994 to 2014. Findings The findings reveal that Gh₵6.28m on average was transferred to each district annually, which tend to increase by 8.4 percent in election years. Further, the swing districts received 5.2 percent more than the aligned districts. Practical implications The sharing mechanism is significantly influenced by political considerations as there exists a political budget cycle and a general dominance of swing effects. Social implications The fiscal transfer system disregards the social principles of fairness and efficiency. Therefore, a wider consultative process i...
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