Inflation, public debt and unemployment nexus in Ghana. An ARDL analysis

Figures & data

Table 1. Descriptive statistics of variables.

Variable	Observation	Mean	Maximum	Minimum	Std. dev
PD	33	58.970	111.945	26.216	19.743
INF	33	18.762	59.317	6.698	11.794
UNEMPT	33	5.536	10.460	2.170	2.142
TR	33	72.897	116.048	38.517	19.466
REM	33	2.342	10.085	0.094	2.721
GDP	33	5.247	14.047	0.514	2.483
GCF	33	20.179	29.002	11.764	4.854
FDI	33	3.895	9.466	0.251	2.692
EXR	33	1.917	5.712	0.680	1.796
BD	33	−5.908	−1.590	−17.440	3.272

Source: Author’s construct, 2023.

Figure 1. Trend graphs of variables.

Source: Authors’ construct, 2023.

Figure A1. Stability test for Model 1.

Figure B1. Stability test for Model 2.

Table 2. Results of Unit Root Test (ADF).

Level Form			First Difference
ADF			ADF
Variable	Intercept	Prob	Intercept	Prob
PD	−2.1873	0.2145	−4.5964***	0.0009
REM	−1.6708	0.4359	−6.7007***	0.0000
INF	−3.2405**	0.0267	−6.1696***	0.0000
FDI	−1.8962	0.3298	−5.1294***	0.0002
EXR	−2.2722	0.4326	−4.7583***	0.0033
GCF	−2.6787	0.0887	−5.4363***	0.0001
GDP	−3.7145***	0.0086	−7.8050***	0.0000
UNEMPT	−1.2552	0.6368	−4.6641***	0.0008
TR	−2.4225	0.1438	−6.7538***	0.0000
BD	−2.1856	0.2151	−3.8477***	0.0070

***Significance at 1% level.

Source: Author’s construct, 2023.

Table 3. Results of bounds test for cointegration.

Effect of inflation on public debt - Model 1
Significance Level	Critical values		F- statistics
	Lower bound I(0)	Upper bound I(1)
10%	2.26	3.35
5%	2.62	3.79	12.07
2.50%	2.96	4.18
1%	3.41	4.68
Effect of Debt on Unemployment - Model 2
	Critical values		F- statistics
Significance Level	Lower bound I(0)	Upper bound I(1)
10%	2.72	3.77
5%	3.23	4.35	6.95
2.50%	3.6	4.89
1%	4.29	5.61

Source: Author’s estimation, 2023.

Table 4. Estimated long-run results.

Public debt as dependent variable - Model 1
Variable	Coefficient	Std. error	Prob
INF	−4.6912	1.0046	0.0185
BD	−5.9239	0.6882	0.0033
EXR	18.5901	4.3438	0.0234
GDP	−11.1941	1.3897	0.0040
TR	1.1224	0.2400	0.0185
Unemployment rate as a dependent variable - Model 2
PD	0.074325	0.014372	0.0000
REM	−0.6168	0.0851	0.0000
GCF	0.0439	0.0521	0.4083

Source: Author’s estimation, 2023.

Table 5. Estimated short-run results.

Variable	Model 1		Model 2
	Coeff	Prob	Coeff	Prob
C	62.8033	0.0008	0.9573	0.0002
	(4.5435)		(0.2124)
D(INF)	−0.8724	0.0017
	(0.0806)
D(BD)	0.7663	0.0841
	(0.3008)
D(EXR)	−5.8179	0.0090
	(0.9594)
D(GDP)	−4.9251	0.0010
	(0.3840)
D(TR)	0.9398	0.0009
	(0.0701)
D(PD)			0.0371	0.0005
			(0.0092)
D(REM)			0.0122	0.8655
			(0.0709)
CointEq (-1)*	−1.0621	0.0008	−0.5623	0.0000
	(0.0764)		(0.1001)
Observation	29		31
R-squared	0.9898		0.7365
Log likelihood	−47.7106		−24.4248
DW stat	2.5628		1.9826
F-statistic	38.6347		13.9731
Prob (F-stat)	0.0000		0.0000

Source: Author’s estimation, 2023.

Note. Numbers in brackets represent standard error.

Table 6. Residual and stability tests results.

Effect of inflation on public debt - Model 1
Method	F-Statistic	Prob
Serial correlation	34.85601	F (2, 1) = 0.1189
Heteroscedasticity	2.909614	F (25, 3) = 0.2060
Normality (Jarque-Bera)	2.235262	0.327054, Normal
CUSUM	Within 5% critical region	Stable
CUSUMSQ	Within 5% critical region	Stable
Effect of public debt on unemployment- Model 2
Serial Correlation	0.046930	F(2,20) = 0.9543
Heteroscedasticity	1.033135	F (8,22) = 0.4417
Normality (Jacque -Bera)	1.355566	0.507442, Normal
CUSUM	Within 5% critical region	Stable
CUSUMSQ	Within 5% critical region	Stable
CUSUMSQ	Within 5% critical region	Stable

Source: Author’s construct, 2023.

Table A1. Variables and their measurement.

Variable	Definition	Measurement
PD	Public debt	Total domestic and foreign debt as a percentage of GDP
INF	Inflation rate	Inflation as measured by the consumer price index
UNEMPT	Unemployment rate	Labour force as a percentage of total working age population
TR	Trade (Openness of the economy)	Imports plus exports (% of GDP)
REM	Foreign Remittances received	Total remittances received (% of GDP)
GDP	Gross Domestic Product	Annual percentage growth rate of GDP at market prices
GCF	Gross Capital Formation	Gross Capital Formation as a percentage of GDP
FDI	Foreign Direct Investment	Foreign Direct Investment as a percentage of GDP
EXR	Exchange rate	Exchange rate in US dollars as percentage of GDP
BD	Budget deficit	Budget deficit as a percentage of GDP

Source: Author’s construct, 2023.

Data availability statement

The data is available upon request.