This paper presents an econometric model for household consumption in Ghana with the aim of highlighting the effect of interest rate on deposit on household consumption using time series data from 1970 to 2009. The paper also looks at other macroeconomics variables like inflation rate and GDP per Capita that have effect on household consumption. The ARDL Bound test was used to test for cointegration among these variables. The results showed that there exists a negative relationship between interest rate on deposits and household consumption both in the long run and short run. However, it was found not significant in the long run but rather in the short run.
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