“Wagner’s law is tested by using the traditional versions and our own versions
which account for prices. Results show that Wagner’s law exists in Ghana.
However, there is no empirical support to the view that increases in government
expenditures lead to economic growth. We also fail to’ lend empirical support to
Friedman and Buchanan- Wagner’s claim that changes in taxes cause changes in
government expenditures. There is no empirical evidence to support the view
that budgetary processes of the country were unduly influenced along
antagonistic party lines over the period of study. Rather, we find that Barro’s
view on fiscal policy exists in the country. This suggests that neither tax cuts proposed by Friedman, nor tax hikes advocated by Buchanan-Wagner, is an
ideal policy that can be implemented to reduce the growing fiscal deficits and
national debt. The optimal policy for reducing both fiscal deficits and national
debt is to cut government expenditures. We also find that changes in interest
rates influence economic growth, which means that monetary policy is also
important in stabilizing the Ghanaian economy.”
