Modelling the Relationship Between Trade Openness, Macroeconomic Variables and Economic Growth in Ghana Using Ardl Models

Ebenezer Ayaaba; Anuwoje Ida L. Abonongo

doi:doi:10.11648/j.ajtas.20251404.15

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Modelling the Relationship Between Trade Openness, Macroeconomic Variables and Economic Growth in Ghana Using Ardl Models

Ebenezer Ayaaba^*, Anuwoje Ida L. Abonongo

Published in American Journal of Theoretical and Applied Statistics (Volume 14, Issue 4)

Received: 4 July 2025 Accepted: 21 July 2025 Published: 15 August 2025

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Abstract

This study looked at the interconnections among trade openness, national income (GDP), investment, exchange rate, government spending, financial development and inflation in Ghana employing the autoregressive distributed lag (ARDL) model. The bounds cointegration, as applicable within the ARDL modelling was carried out to check the existence or otherwise of long run relationships among the economic variables while the error correction model (ECM) was also used to capture the short-term relationships among the variables. Unlike known previous studies in Ghana, this study made use of three trade openness proxies including ratio of imports plus exports to GDP (OPEN1), ratio of export to GDP (OPEN2) and the ratio of import to GDP (OPEN3). With GDP growth as endogenous variable, the bound co-integration analysis results showed that there exists co-integration among GDP, openness to trade and the macroeconomic variables included in the study. In this study, the short-run results found that openness to trade and government spending had significant positive effects on Ghana’s GDP growth. However, investment, exchange rate and financial development were found to be impacting growth in GDP significantly but negatively. In the long term, trade openness and government spending again had positive influence on GDP growth whiles investment, real effective exchange rate and financial development still impacted GDP growth significantly and negatively at 5 percent significance level. This study recommends among others things that the government of Ghana should reduce trade barriers and streamline regulations in critical sectors to promote GDP growth in Ghana.

Published in	American Journal of Theoretical and Applied Statistics (Volume 14, Issue 4)
DOI	10.11648/j.ajtas.20251404.15
Page(s)	160-177
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2025. Published by Science Publishing Group

Keywords

Trade Openness, GDP Growth, Bounds Cointegration and Macroeconomic Variables

References

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APA Style

Ayaaba, E., Abonongo, A. I. L. (2025). Modelling the Relationship Between Trade Openness, Macroeconomic Variables and Economic Growth in Ghana Using Ardl Models. American Journal of Theoretical and Applied Statistics, 14(4), 160-177. https://doi.org/10.11648/j.ajtas.20251404.15

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ACS Style

Ayaaba, E.; Abonongo, A. I. L. Modelling the Relationship Between Trade Openness, Macroeconomic Variables and Economic Growth in Ghana Using Ardl Models. Am. J. Theor. Appl. Stat. 2025, 14(4), 160-177. doi: 10.11648/j.ajtas.20251404.15

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AMA Style

Ayaaba E, Abonongo AIL. Modelling the Relationship Between Trade Openness, Macroeconomic Variables and Economic Growth in Ghana Using Ardl Models. Am J Theor Appl Stat. 2025;14(4):160-177. doi: 10.11648/j.ajtas.20251404.15

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@article{10.11648/j.ajtas.20251404.15,
  author = {Ebenezer Ayaaba and Anuwoje Ida L. Abonongo},
  title = {Modelling the Relationship Between Trade Openness, Macroeconomic Variables and Economic Growth in Ghana Using Ardl Models
},
  journal = {American Journal of Theoretical and Applied Statistics},
  volume = {14},
  number = {4},
  pages = {160-177},
  doi = {10.11648/j.ajtas.20251404.15},
  url = {https://doi.org/10.11648/j.ajtas.20251404.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajtas.20251404.15},
  abstract = {This study looked at the interconnections among trade openness, national income (GDP), investment, exchange rate, government spending, financial development and inflation in Ghana employing the autoregressive distributed lag (ARDL) model. The bounds cointegration, as applicable within the ARDL modelling was carried out to check the existence or otherwise of long run relationships among the economic variables while the error correction model (ECM) was also used to capture the short-term relationships among the variables. Unlike known previous studies in Ghana, this study made use of three trade openness proxies including ratio of imports plus exports to GDP (OPEN1), ratio of export to GDP (OPEN2) and the ratio of import to GDP (OPEN3). With GDP growth as endogenous variable, the bound co-integration analysis results showed that there exists co-integration among GDP, openness to trade and the macroeconomic variables included in the study. In this study, the short-run results found that openness to trade and government spending had significant positive effects on Ghana’s GDP growth. However, investment, exchange rate and financial development were found to be impacting growth in GDP significantly but negatively. In the long term, trade openness and government spending again had positive influence on GDP growth whiles investment, real effective exchange rate and financial development still impacted GDP growth significantly and negatively at 5 percent significance level. This study recommends among others things that the government of Ghana should reduce trade barriers and streamline regulations in critical sectors to promote GDP growth in Ghana.},
 year = {2025}
}

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TY  - JOUR
T1  - Modelling the Relationship Between Trade Openness, Macroeconomic Variables and Economic Growth in Ghana Using Ardl Models

AU  - Ebenezer Ayaaba
AU  - Anuwoje Ida L. Abonongo
Y1  - 2025/08/15
PY  - 2025
N1  - https://doi.org/10.11648/j.ajtas.20251404.15
DO  - 10.11648/j.ajtas.20251404.15
T2  - American Journal of Theoretical and Applied Statistics
JF  - American Journal of Theoretical and Applied Statistics
JO  - American Journal of Theoretical and Applied Statistics
SP  - 160
EP  - 177
PB  - Science Publishing Group
SN  - 2326-9006
UR  - https://doi.org/10.11648/j.ajtas.20251404.15
AB  - This study looked at the interconnections among trade openness, national income (GDP), investment, exchange rate, government spending, financial development and inflation in Ghana employing the autoregressive distributed lag (ARDL) model. The bounds cointegration, as applicable within the ARDL modelling was carried out to check the existence or otherwise of long run relationships among the economic variables while the error correction model (ECM) was also used to capture the short-term relationships among the variables. Unlike known previous studies in Ghana, this study made use of three trade openness proxies including ratio of imports plus exports to GDP (OPEN1), ratio of export to GDP (OPEN2) and the ratio of import to GDP (OPEN3). With GDP growth as endogenous variable, the bound co-integration analysis results showed that there exists co-integration among GDP, openness to trade and the macroeconomic variables included in the study. In this study, the short-run results found that openness to trade and government spending had significant positive effects on Ghana’s GDP growth. However, investment, exchange rate and financial development were found to be impacting growth in GDP significantly but negatively. In the long term, trade openness and government spending again had positive influence on GDP growth whiles investment, real effective exchange rate and financial development still impacted GDP growth significantly and negatively at 5 percent significance level. This study recommends among others things that the government of Ghana should reduce trade barriers and streamline regulations in critical sectors to promote GDP growth in Ghana.
VL  - 14
IS  - 4
ER  -

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Ebenezer Ayaaba

Department of Statistics and Actuarial Science, School of Mathematical Sciences, C. K. Tedam University of Technology and Applied Sciences, Navrongo, Ghana

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Anuwoje Ida L. Abonongo

Department of Statistics and Actuarial Science, School of Mathematical Sciences, C. K. Tedam University of Technology and Applied Sciences, Navrongo, Ghana

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APA Style

Ayaaba, E., Abonongo, A. I. L. (2025). Modelling the Relationship Between Trade Openness, Macroeconomic Variables and Economic Growth in Ghana Using Ardl Models. American Journal of Theoretical and Applied Statistics, 14(4), 160-177. https://doi.org/10.11648/j.ajtas.20251404.15

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ACS Style

Ayaaba, E.; Abonongo, A. I. L. Modelling the Relationship Between Trade Openness, Macroeconomic Variables and Economic Growth in Ghana Using Ardl Models. Am. J. Theor. Appl. Stat. 2025, 14(4), 160-177. doi: 10.11648/j.ajtas.20251404.15

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AMA Style

Ayaaba E, Abonongo AIL. Modelling the Relationship Between Trade Openness, Macroeconomic Variables and Economic Growth in Ghana Using Ardl Models. Am J Theor Appl Stat. 2025;14(4):160-177. doi: 10.11648/j.ajtas.20251404.15

Copy | Download

@article{10.11648/j.ajtas.20251404.15,
  author = {Ebenezer Ayaaba and Anuwoje Ida L. Abonongo},
  title = {Modelling the Relationship Between Trade Openness, Macroeconomic Variables and Economic Growth in Ghana Using Ardl Models
},
  journal = {American Journal of Theoretical and Applied Statistics},
  volume = {14},
  number = {4},
  pages = {160-177},
  doi = {10.11648/j.ajtas.20251404.15},
  url = {https://doi.org/10.11648/j.ajtas.20251404.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajtas.20251404.15},
  abstract = {This study looked at the interconnections among trade openness, national income (GDP), investment, exchange rate, government spending, financial development and inflation in Ghana employing the autoregressive distributed lag (ARDL) model. The bounds cointegration, as applicable within the ARDL modelling was carried out to check the existence or otherwise of long run relationships among the economic variables while the error correction model (ECM) was also used to capture the short-term relationships among the variables. Unlike known previous studies in Ghana, this study made use of three trade openness proxies including ratio of imports plus exports to GDP (OPEN1), ratio of export to GDP (OPEN2) and the ratio of import to GDP (OPEN3). With GDP growth as endogenous variable, the bound co-integration analysis results showed that there exists co-integration among GDP, openness to trade and the macroeconomic variables included in the study. In this study, the short-run results found that openness to trade and government spending had significant positive effects on Ghana’s GDP growth. However, investment, exchange rate and financial development were found to be impacting growth in GDP significantly but negatively. In the long term, trade openness and government spending again had positive influence on GDP growth whiles investment, real effective exchange rate and financial development still impacted GDP growth significantly and negatively at 5 percent significance level. This study recommends among others things that the government of Ghana should reduce trade barriers and streamline regulations in critical sectors to promote GDP growth in Ghana.},
 year = {2025}
}

Copy | Download

TY  - JOUR
T1  - Modelling the Relationship Between Trade Openness, Macroeconomic Variables and Economic Growth in Ghana Using Ardl Models

AU  - Ebenezer Ayaaba
AU  - Anuwoje Ida L. Abonongo
Y1  - 2025/08/15
PY  - 2025
N1  - https://doi.org/10.11648/j.ajtas.20251404.15
DO  - 10.11648/j.ajtas.20251404.15
T2  - American Journal of Theoretical and Applied Statistics
JF  - American Journal of Theoretical and Applied Statistics
JO  - American Journal of Theoretical and Applied Statistics
SP  - 160
EP  - 177
PB  - Science Publishing Group
SN  - 2326-9006
UR  - https://doi.org/10.11648/j.ajtas.20251404.15
AB  - This study looked at the interconnections among trade openness, national income (GDP), investment, exchange rate, government spending, financial development and inflation in Ghana employing the autoregressive distributed lag (ARDL) model. The bounds cointegration, as applicable within the ARDL modelling was carried out to check the existence or otherwise of long run relationships among the economic variables while the error correction model (ECM) was also used to capture the short-term relationships among the variables. Unlike known previous studies in Ghana, this study made use of three trade openness proxies including ratio of imports plus exports to GDP (OPEN1), ratio of export to GDP (OPEN2) and the ratio of import to GDP (OPEN3). With GDP growth as endogenous variable, the bound co-integration analysis results showed that there exists co-integration among GDP, openness to trade and the macroeconomic variables included in the study. In this study, the short-run results found that openness to trade and government spending had significant positive effects on Ghana’s GDP growth. However, investment, exchange rate and financial development were found to be impacting growth in GDP significantly but negatively. In the long term, trade openness and government spending again had positive influence on GDP growth whiles investment, real effective exchange rate and financial development still impacted GDP growth significantly and negatively at 5 percent significance level. This study recommends among others things that the government of Ghana should reduce trade barriers and streamline regulations in critical sectors to promote GDP growth in Ghana.
VL  - 14
IS  - 4
ER  -

Copy | Download