Do Petroleum Price Asymmetries and Price Deregulation Cause Business Cycles in Ghana?

Abstract

Abstract In the context of volatilities in the international situations in recent times, studies regarding the complexities of oil price fluctuations have focussed on analysing the special fluctuation characteristics of oil prices in different historical perspectives. This study examines the extent to which petroleum price fluctuations under the petroleum price deregulation regime impact on business cycles in Ghana. The study uses the autoregressive distributed lag (ARDL) model with a quarterly data spanning from the first quarter of 2005 to the fourth quarter of 2022. Our empirical results show that price stability impacts positively on economic growth, both in the short and the long run, while foreign direct investment also has a positive effect on economic growth in the short run. Our findings are consistent with theory and empirical studies and contributes immensely to the discussions about price asymmetry and business cycles. Again, offers a nuanced perspective on how policy makers can enact policies that ensures efficient and effective deregulation and price stability.