Political business cycle and its effects on the Ghanaian economy

Abstract

The abuse of incumbency during elections in order to retain power has become worldwide knowledge and a contentious issue in Political Economics. This paper seeks to establish the evidence of political business cycle in Ghana. Data for the estimations were sourced from WDI, 2014. The data spanned from 1990 to 2013 within which Ghana has had six uninterrupted democratic elections and consistent democratic rule. Three different models were specified. The method of Ordinary Least Squares estimation technique was employed to determine the impact of election years on Government Consumption Expenditure, Fiscal Deficit and Real GDP. The results suggest that there are no significant impacts of election years on the changes in Government Consumption Expenditure, Fiscal Deficit and Real GDP in Ghana. However, it was determined that Government Consumption Expenditure and Fiscal Deficit have positive relationships with election years in Ghana, though statistically insignificantly. The study recommends that there should be more fiscal discipline, especially close to/or in election years in Ghana