Do oil prices influence economic growth in Ghana? An empirical analysis

Figures & data

Figure 1. (a) Plotted series of filtered oil prices from 1970 to 2012. (b) Plotted series of filtered real GDP from 1970 to 2012.

Table 1. Descriptive statistics of variables

Indicators	1970–1979	1980 −1989	1990–1999	2000–2009	2010–2012	Mean	St. dev	Max	Min
Real GDP growth	1.446	1.993	4.265	5.364	10.413	3.766	4.769	14.046	−12.432
Per capita GDP growth	−0.842	−1.013	1.580	2.686	7.732	1.100	4.689	11.278	−14.455
Oil price	10.069	25.172	18.202	49.173	96.016	30.563	26.464	105.008	2.180

Table 2. ADF and PP unit root test without a trend

ADF unit root test without a trend			PP unit root test without a trend
Variable	Test statistic at level	Test statistic at 1st difference	Test statistic at level	Test statistic at 1st difference
lnGDP	3.603	−4.143**	3.525	−4.142**
lnOP	−2.55	−6.029***	−2.567	−6.026***

Note: ** and *** are significance levels at 10%, 5% and 1%, respectively.

Table 3. ADF and PP unit root test with a trend

ADF unit root test without a trend			PP unit root test without a trend
Variable	Test statistic at level	Test statistic at 1st difference	Test statistic at level	Test statistic at 1st difference
lnGDP	3.603	−4.143**	3.525	−4.142**
lnOP	−2.55	−6.029***	−2.567	−6.026***

Note: ** and *** are significance levels at 10%, 5% and 1%, respectively.

Table 4. Selection-order criteria

lag	LL	LR	df	p	FPE	AIC	HQIC	SBIC
0	−47.0263				0.042359	2.51417	2.54478	2.59948
1	64.668	223.39	4	0.000	0.000169	−3.00861	−2.91679*	−2.75268*
2	69.2346	9.1332	4	0.058	0.000165	−3.03767	−2.88463	−2.50406-
3	74.4741	10.479*	4	0.033	0.000155*	−3.10124*	−2.88698	−2.61112
4	76.895	4.8417	4	0.304	0.00017	−3.02026	−2.74478	−2.25246

Note: * represents 10% significance level.

LL and LR represent log likelihood and likelihood ratio respectively.

Table 5. Johansen cointegration test

Result from Johansen cointegration test
Null hypothesis	${\mathit{J}}_{\mathit{t}\mathit{r}\mathit{a}\mathit{c}\mathit{e}}$	${\mathit{J}}_{\mathit{m}\mathit{a}\mathit{x}}$	Conclusion
r = 0	36.18263	22.81848	Evidence of cointegration
	(0.0018)**	(0.0152)**
r = 1	13.36415	13.36415	Evidence of cointegration
	(0.036)**	(0.036)**

Note: p-values are in parenthesis and ** represents 5% level of significance.

Table 6. Estimated long-run relationship between economic growth and oil prices

Variable	Johansen	FMOLS	DOLS
$lnOP$	−0.134674	−0.042139	−0.019406
	(0.05408)	(0.4320)	(0.6899)
$Trend$	0.033255	0.039237	0.037842
	(0.00468)**	(0.0000)**	(0.0000)**
$C$	-	8.577781	8.465913
	-	(0.0000)**	(0.0000)**
${\bar{R}}^2$	-	0.87	0.95
$N$	39	42	40

Note: p-value are in parenthesis and ** represents 5% level of significance.

Table 7. Granger causality between oil price and economic growth

Hypothesis	F-statistic	p-Value	Decision
$lnOP$ does not Granger cause $lnGDP$	$5.53$	$0.0035$	Reject null hypothesis
$lnGDP$ does not Granger cause $lnOP$	$2.71$	$0.0609$	Do not reject null hypothesis