A new look at the COVID-19 pandemic and living standards nexus in Ghana: Evidence from an empirical perspective

• Examine the COVID-19 pandemic's impact on living standards in Ghana using GNI as a proxy. • Utilizes VECM, variance decomposition, and impulse response functions to analyze inflation, GDP, population growth, and FDI. • Inflation and population growth significantly impact living standards, while FDI shows no measurable effect. • Applies Resilience Theory to understand economic adaptation during crises. • Recommends policies to manage inflation, support sustainable growth, and optimize FDI for long-term living standard improvements. The COVID-19 crisis has seriously challenged global living standards, particularly in developing countries like Ghana. While the crisis created its distortions in the economy, little empirical evidence on its effects on living standards has been available for such environments. The paper contributes to the body of work by applying a novel time-series analysis technique to investigate how living standards were affected by basic macroeconomic variables during and beyond the period of the pandemic. Using Gross National Income (GNI) per capita as a proxy, the study uses Vector Error Correction Model (VECM), supplemented by variance decomposition and impulse response functions, to examine the short- and long-term impacts of inflation (CPI), economic growth (GDP), population growth, and foreign direct investment (FDI) on GNI from 1990 to 2023. The findings show that inflation and population growth had statistically significant adverse effects on GNI, while FDI had no measurable impact. GDP was a critical short- and long-term positive determinant of living standards. These results highlight the robustness of domestic economic activity and poor FDI absorption in Ghana. This paper is among the first to apply this advanced econometric model in estimating pandemic-induced welfare effects on an African economy and provides valuable lessons for macroeconomic stabilization policy. The findings are particularly interesting for policymakers looking to increase economic resilience, deal with population pressure, and improve living standards through collaborative growth and beyond-crisis investment planning.