Drafts by Allor Precious
This paper examines whether productivity growth induced by intersectoral labor movement affects i... more This paper examines whether productivity growth induced by intersectoral labor movement affects inequality and poverty. To address this question a nonparametric shift-share decomposition technique is employed to decompose productivity growth into the structural change component; the component of productivity growth that is induced by the intersectoral labor movement, and the technological change component; the component of productivity growth that is induced by capital or improvements in productive efficiency. The paper then examines the long-run impact of structural change-induced productivity growth on poverty and inequality for a sample of 28 countries, and with a focus on Sub-saharan Africa and Asia. The Theil index of industrial wage inequality and the Gini coefficient from the estimated household income inequality data from the University of Texas Inequality Project (UTIP) are used as measures of inequality, and the percentage change in household final consumption measures poverty. Parametric fixed effects estimation techniques are employed and I find that labor share in productivity growth reduces poverty and inequality for the full sample and the Asia and sub-Saharan Africa subsamples. The effects are however stronger for Asia than for sub-Saharan Africa. Nonparametric time-varying coefficient estimation techniques are also employed to determine if any nonlinearities exist in the relationship between the dependent and independent variables. The results confirm that structural change has nonlinear effects on poverty and inequality. The paper recommends that governments should encourage policies directed towards improving labor shares in productivity as a means to reduce poverty and inequality, especially for developing countries.
Ghana’s rising external debts in recent times have become of great concern to policymakers, with... more Ghana’s rising external debts in recent times have become of great concern to policymakers, with many wondering if the continuous borrowing is beneficial to the economy, especially given the moderate rates at which the economy is growing within this same period. There is controversy in both empirical and theoretical literature about the impact of external debts on economic growth.
While some theories and empirical studies postulate that external debts encourage economic growth by augmenting domestic resources, others conclude that external debts negatively affects growth, as it discourages investments, both in the private and public sector. Some empirical studies have also suggested a Laffer curve effect of external debt on economic growth.
This study further examines the effect of external debts on economic growth in Ghana for the period 1980 to 2014. The study also investigates the factors accounting for the rising external debts in Ghana for the specified period. In all, three models are estimated. The first model is used to determine the factors accounting for rising external debts in Ghana. External debt stock is used as the dependent variable, and real interest rate, fiscal deficits, inflation rate, urban population (% of total), terms of trade, exchange rates, and GDP growth rate are the independent variables. The second and third models are used to determine the impact of external debts and external debt servicing on economic growth respectively. They are modeled along the Solow growth model,
augmenting it with measures of the external debt burden. GDP is used as the dependent variable in both models. The independent variables include gross domestic investment, population, trade openness and foreign direct investments. As measures of the external debt burden, external debt to
GDP is used in the second model and debt service on external debt to GDP is used in the third model. OLS estimation technique is used in estimating the various models. Variance inflation factor (VIF)
and Tolerance (TOL) values, the Koenker-Basset test, and the Bruesch-Godfrey test are used to
test for multicollinearity, heteroscedasticity and autocorrelation respectively.
Among others, the results of the study, shows that the rising exchange rates, fiscal deficits and
real interest rates have contributed significantly to the rising external debts in Ghana. The results
also show that both external debt and external debt servicing have a negative impact on
economic growth in Ghana.
The study recommends that government should as much as possible meet its expenditure
requirements through domestically generated funds. If the government borrows however,
measures should put in place to ensure that borrowed funds are directed into developmental
projects so as to generate the needed revenue to service debt interest payments, fiscal discipline
must also be encouraged, in order to reduce the rate at which the government borrows.
Thesis Chapters by Allor Precious
Ghana’s rising external debts in recent times have become of great concern to policymakers, with... more Ghana’s rising external debts in recent times have become of great concern to policymakers, with many wondering if the continuous borrowing is beneficial to the economy, especially given the moderate rates at which the economy is growing within this same period. There is controversy in both empirical and theoretical literature about the impact of external debts on economic growth.
While some theories and empirical studies postulate that external debts encourage economic growth by augmenting domestic resources, others conclude that external debts negatively affects growth, as it discourages investments, both in the private and public sector. Some empirical studies have also suggested a Laffer curve effect of external debt on economic growth.
This study further examines the effect of external debts on economic growth in Ghana for the period 1980 to 2014. The study also investigates the factors accounting for the rising external debts in Ghana for the specified period. In all, three models are estimated. The first model is used to determine the factors accounting for rising external debts in Ghana. External debt stock is used as the dependent variable, and real interest rate, fiscal deficits, inflation rate, urban population (% of total), terms of trade, exchange rates, and GDP growth rate are the independent variables. The second and third models are used to determine the impact of external debts and external debt servicing on economic growth respectively. They are modeled along the Solow growth model,
augmenting it with measures of the external debt burden. GDP is used as the dependent variable in both models. The independent variables include gross domestic investment, population, trade openness and foreign direct investments. As measures of the external debt burden, external debt to GDP is used in the second model and debt service on external debt to GDP is used in the third model.
OLS estimation technique is used in estimating the various models. Variance inflation factor (VIF) and Tolerance (TOL) values, the Koenker-Basset test, and the Bruesch-Godfrey test are used to test for multicollinearity, heteroscedasticity, and autocorrelation respectively.
Among others, the results of the study show that the rising exchange rates, fiscal deficits, and real interest rates have contributed significantly to the rising external debts in Ghana. The results also show that both external debt and external debt servicing have a negative impact on economic growth in Ghana.
The study recommends that government should as much as possible meet its expenditure requirements through domestically generated funds. If the government borrows, however, measures should put in place to ensure that borrowed funds are directed into developmental
projects so as to generate the needed revenue to service debt interest payments, fiscal discipline must also be encouraged, in order to reduce the rate at which the government borrows
Papers by Allor Precious
This paper examines whether productivity growth induced by intersectoral labor movement affects i... more This paper examines whether productivity growth induced by intersectoral labor movement affects inequality and poverty. To address this question a nonparametric shift-share decomposition technique is employed to decompose productivity growth into the structural change component; the component of productivity growth that is induced by the intersectoral labor movement, and the technological change component; the component of productivity growth that is induced by capital or improvements in productive efficiency. The paper then examines the long-run impact of structural change-induced productivity growth on poverty and inequality for a sample of 28 countries, and with a focus on Sub-saharan Africa and Asia. The Theil index of industrial wage inequality and the Gini coefficient from the estimated household income inequality data from the University of Texas Inequality Project (UTIP) are used as measures of inequality, and the percentage change in household final consumption measures poverty. Parametric fixed effects estimation techniques are employed and I find that labor share in productivity growth reduces poverty and inequality for the full sample and the Asia and sub-Saharan Africa subsamples. The effects are however stronger for Asia than for sub-Saharan Africa. Nonparametric time-varying coefficient estimation techniques are also employed to determine if any nonlinearities exist in the relationship between the dependent and independent variables. The results confirm that structural change has nonlinear effects on poverty and inequality. The paper recommends that governments should encourage policies directed towards improving labor shares in productivity as a means to reduce poverty and inequality, especially for developing countries.
Journal of Economics and International Finance, 2020
The Ghanaian Cedi has recently experienced persistent depreciation against its major trading part... more The Ghanaian Cedi has recently experienced persistent depreciation against its major trading partners. This paper investigates the contribution of inflation and monetary policy in this persistent depreciation. The paper makes use of the Autoregressive Distributed Lag (ARDL) and Bounds test of cointegration and the Toda and Yamamoto (1995) Augmented Granger Causality test to determine the long and shortrun dynamics of the impact of monetary policy and inflation on exchange rates in Ghana, using data ranging from 1970 to 2017. The paper finds a short-run depreciation effect of contractionary monetary policy on the exchange rate, reflecting the exchange rate puzzle. The long-run results however show an appreciating effect. Inflation is also found to depreciate the currency both in the short and long-run. The causality tests also reveal a bi-directional relationship between the exchange rate and the inflation rate, while a unidirectional causal relationship exists between monetary policy and the exchange rate. The paper recommends that inflation stabilization policies should be prioritized in Ghana, as a means to curb the rising exchange rates. Improvement in terms of trade through export value promotion should also be given the needed attention as this is found to appreciate the currency in the long-run.
Journal of Economics and International Finance, 2020
The Ghanaian Cedi has recently experienced persistent depreciation against its major trading part... more The Ghanaian Cedi has recently experienced persistent depreciation against its major trading partners. This paper investigates the contribution of inflation and monetary policy in this persistent depreciation. The paper makes use of the Autoregressive Distributed Lag (ARDL) and Bounds test of cointegration and the Toda and Yamamoto (1995) Augmented Granger Causality test to determine the long and short-run dynamics of the impact of monetary policy and inflation on exchange rates in Ghana, using data ranging from 1970 to 2017. The paper finds a short-run depreciation effect of contractionary monetary policy on the exchange rate, reflecting the exchange rate puzzle. The long-run results however show an appreciating effect. Inflation is also found to depreciate the currency both in the short and long-run. The causality tests also reveal a bi-directional relationship between the exchange rate and the inflation rate, while a unidirectional causal relationship exists between monetary policy and the exchange rate. The paper recommends that inflation stabilization policies should be prioritized in Ghana, as a means to curb the rising exchange rates. Improvement in terms of trade through export value promotion should also be given the needed attention as this is found to appreciate the currency in the long-run.
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Drafts by Allor Precious
While some theories and empirical studies postulate that external debts encourage economic growth by augmenting domestic resources, others conclude that external debts negatively affects growth, as it discourages investments, both in the private and public sector. Some empirical studies have also suggested a Laffer curve effect of external debt on economic growth.
This study further examines the effect of external debts on economic growth in Ghana for the period 1980 to 2014. The study also investigates the factors accounting for the rising external debts in Ghana for the specified period. In all, three models are estimated. The first model is used to determine the factors accounting for rising external debts in Ghana. External debt stock is used as the dependent variable, and real interest rate, fiscal deficits, inflation rate, urban population (% of total), terms of trade, exchange rates, and GDP growth rate are the independent variables. The second and third models are used to determine the impact of external debts and external debt servicing on economic growth respectively. They are modeled along the Solow growth model,
augmenting it with measures of the external debt burden. GDP is used as the dependent variable in both models. The independent variables include gross domestic investment, population, trade openness and foreign direct investments. As measures of the external debt burden, external debt to
GDP is used in the second model and debt service on external debt to GDP is used in the third model. OLS estimation technique is used in estimating the various models. Variance inflation factor (VIF)
and Tolerance (TOL) values, the Koenker-Basset test, and the Bruesch-Godfrey test are used to
test for multicollinearity, heteroscedasticity and autocorrelation respectively.
Among others, the results of the study, shows that the rising exchange rates, fiscal deficits and
real interest rates have contributed significantly to the rising external debts in Ghana. The results
also show that both external debt and external debt servicing have a negative impact on
economic growth in Ghana.
The study recommends that government should as much as possible meet its expenditure
requirements through domestically generated funds. If the government borrows however,
measures should put in place to ensure that borrowed funds are directed into developmental
projects so as to generate the needed revenue to service debt interest payments, fiscal discipline
must also be encouraged, in order to reduce the rate at which the government borrows.
Thesis Chapters by Allor Precious
While some theories and empirical studies postulate that external debts encourage economic growth by augmenting domestic resources, others conclude that external debts negatively affects growth, as it discourages investments, both in the private and public sector. Some empirical studies have also suggested a Laffer curve effect of external debt on economic growth.
This study further examines the effect of external debts on economic growth in Ghana for the period 1980 to 2014. The study also investigates the factors accounting for the rising external debts in Ghana for the specified period. In all, three models are estimated. The first model is used to determine the factors accounting for rising external debts in Ghana. External debt stock is used as the dependent variable, and real interest rate, fiscal deficits, inflation rate, urban population (% of total), terms of trade, exchange rates, and GDP growth rate are the independent variables. The second and third models are used to determine the impact of external debts and external debt servicing on economic growth respectively. They are modeled along the Solow growth model,
augmenting it with measures of the external debt burden. GDP is used as the dependent variable in both models. The independent variables include gross domestic investment, population, trade openness and foreign direct investments. As measures of the external debt burden, external debt to GDP is used in the second model and debt service on external debt to GDP is used in the third model.
OLS estimation technique is used in estimating the various models. Variance inflation factor (VIF) and Tolerance (TOL) values, the Koenker-Basset test, and the Bruesch-Godfrey test are used to test for multicollinearity, heteroscedasticity, and autocorrelation respectively.
Among others, the results of the study show that the rising exchange rates, fiscal deficits, and real interest rates have contributed significantly to the rising external debts in Ghana. The results also show that both external debt and external debt servicing have a negative impact on economic growth in Ghana.
The study recommends that government should as much as possible meet its expenditure requirements through domestically generated funds. If the government borrows, however, measures should put in place to ensure that borrowed funds are directed into developmental
projects so as to generate the needed revenue to service debt interest payments, fiscal discipline must also be encouraged, in order to reduce the rate at which the government borrows
Papers by Allor Precious
While some theories and empirical studies postulate that external debts encourage economic growth by augmenting domestic resources, others conclude that external debts negatively affects growth, as it discourages investments, both in the private and public sector. Some empirical studies have also suggested a Laffer curve effect of external debt on economic growth.
This study further examines the effect of external debts on economic growth in Ghana for the period 1980 to 2014. The study also investigates the factors accounting for the rising external debts in Ghana for the specified period. In all, three models are estimated. The first model is used to determine the factors accounting for rising external debts in Ghana. External debt stock is used as the dependent variable, and real interest rate, fiscal deficits, inflation rate, urban population (% of total), terms of trade, exchange rates, and GDP growth rate are the independent variables. The second and third models are used to determine the impact of external debts and external debt servicing on economic growth respectively. They are modeled along the Solow growth model,
augmenting it with measures of the external debt burden. GDP is used as the dependent variable in both models. The independent variables include gross domestic investment, population, trade openness and foreign direct investments. As measures of the external debt burden, external debt to
GDP is used in the second model and debt service on external debt to GDP is used in the third model. OLS estimation technique is used in estimating the various models. Variance inflation factor (VIF)
and Tolerance (TOL) values, the Koenker-Basset test, and the Bruesch-Godfrey test are used to
test for multicollinearity, heteroscedasticity and autocorrelation respectively.
Among others, the results of the study, shows that the rising exchange rates, fiscal deficits and
real interest rates have contributed significantly to the rising external debts in Ghana. The results
also show that both external debt and external debt servicing have a negative impact on
economic growth in Ghana.
The study recommends that government should as much as possible meet its expenditure
requirements through domestically generated funds. If the government borrows however,
measures should put in place to ensure that borrowed funds are directed into developmental
projects so as to generate the needed revenue to service debt interest payments, fiscal discipline
must also be encouraged, in order to reduce the rate at which the government borrows.
While some theories and empirical studies postulate that external debts encourage economic growth by augmenting domestic resources, others conclude that external debts negatively affects growth, as it discourages investments, both in the private and public sector. Some empirical studies have also suggested a Laffer curve effect of external debt on economic growth.
This study further examines the effect of external debts on economic growth in Ghana for the period 1980 to 2014. The study also investigates the factors accounting for the rising external debts in Ghana for the specified period. In all, three models are estimated. The first model is used to determine the factors accounting for rising external debts in Ghana. External debt stock is used as the dependent variable, and real interest rate, fiscal deficits, inflation rate, urban population (% of total), terms of trade, exchange rates, and GDP growth rate are the independent variables. The second and third models are used to determine the impact of external debts and external debt servicing on economic growth respectively. They are modeled along the Solow growth model,
augmenting it with measures of the external debt burden. GDP is used as the dependent variable in both models. The independent variables include gross domestic investment, population, trade openness and foreign direct investments. As measures of the external debt burden, external debt to GDP is used in the second model and debt service on external debt to GDP is used in the third model.
OLS estimation technique is used in estimating the various models. Variance inflation factor (VIF) and Tolerance (TOL) values, the Koenker-Basset test, and the Bruesch-Godfrey test are used to test for multicollinearity, heteroscedasticity, and autocorrelation respectively.
Among others, the results of the study show that the rising exchange rates, fiscal deficits, and real interest rates have contributed significantly to the rising external debts in Ghana. The results also show that both external debt and external debt servicing have a negative impact on economic growth in Ghana.
The study recommends that government should as much as possible meet its expenditure requirements through domestically generated funds. If the government borrows, however, measures should put in place to ensure that borrowed funds are directed into developmental
projects so as to generate the needed revenue to service debt interest payments, fiscal discipline must also be encouraged, in order to reduce the rate at which the government borrows