scholarly journals Trade and economic development: global causality and development- and openness-related heterogeneity

2020 ◽  
Vol 17 (4) ◽  
pp. 923-944
Author(s):  
T. Gries ◽  
M. Redlin
Keyword(s):  
Economic Development ◽  
Trade Openness ◽  
Panel Cointegration ◽  
Ordinary Least Squares ◽  
Development Stage ◽  
Long Run ◽  
Short Run ◽  
Method Of Moments Estimation ◽  
General Method Of Moments ◽  
High Degree

Abstract This paper reconsiders the classic relationship between trade and economic development. We examine the short-term and long-run dynamics between trade and income for 167 countries over the period 1970–2011 and assume that the effect is not homogenous for all countries but rather varies according to the development stage and the degree of trade openness. We apply panel cointegration, Granger causality and panel error correction in combination with Dynamic Ordinary Least Squares and General Method of Moments estimation to explore the causal relationship between these two variables. The results suggest a statistically significant positive short-run and long-run global relationship between trade and income. However, when splitting the panel into different income and trade openness groups, a long-run relationship is observed only for high-income countries and countries with a relatively high degree of trade openness.

scholarly journals The Importance of the Financial Derivatives Markets to Economic Development in the World’s Four Major Economies

2019 ◽  
Vol 12 (1) ◽  
pp. 35 ◽  
Author(s):  
Duc Vo ◽  
Son Huynh ◽  
Anh Vo ◽  
Dao Ha
Keyword(s):  
Economic Development ◽  
Least Squares ◽  
Ordinary Least Squares ◽  
Supporting Evidence ◽  
Long Run ◽  
Short Run ◽  
Derivative Markets ◽  
Derivatives Markets ◽  
Growth Volatility ◽  
The U.S

Over the past three decades, China and India have attained economic power close to that of Japan and the U.S. During this period, the importance of the derivatives market within the financial market has been widely recognized. However, little supporting evidence is available on its economic effects. This paper investigates the dynamic relationship between the derivatives markets and economic development in these four large economies, which we consider together as the CIJU (China, India, Japan, and the U.S.) group. We use a Granger-causality test in the framework of a vector error correction model (VECM) to examine this causal and dynamic relation with data for the period 1998Q1 to 2017Q4. Derivative markets are found to positively contribute to economic development in the short run in the U.S., Japan, and India, but the effect disappears in the long run. In China, the derivatives market has a negative effect on economic development in the short run. However, in the long run, we observe a positive effect from the derivatives market on economic development based on two long-run estimation techniques, namely, dynamic ordinary least squares and fully modified ordinary least squares. Also, the development of derivative markets causes growth volatility in India, both in the short run and long run.

Does Governance Matter? Evidence from BRICS

2019 ◽  
pp. 097215091986122
Author(s):  
Bhanu Pratap Singh
Keyword(s):  
Economic Development ◽  
Panel Cointegration ◽  
Least Square ◽  
Economic Modelling ◽  
Causality Test ◽  
Brics Countries ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Short Run ◽  
Long Run Equilibrium

The role of governance is widely debated in the process of economic development. The current study focuses on examining the growth and the governance relationship for BRICS countries utilizing the annual balanced panel data for the period spanning from 1997 to 2015. Per capita real GDP growth is taken as a proxy for economic growth and six World Bank Governance Indicators are used as a measure of governance. Pedroni (2004, Econometric Theory, 20, 597–625) panel cointegration technique and fully modified ordinary least square (FMOLS) are used to look into a long-run equilibrium relationship. Dumitrescu and Hurlin’s (2012, Economic Modelling, 29, 1450–1460) panel causality test is used as a short-run diagnostics test for long-run equilibrium relationship. The major findings of the study show that growth and governance are complementary to each other. In the long run, governance promotes and sustains high-income growth, whereas, in the short run, minimum economic development is required for better functioning of institutions.

scholarly journals Panel Econometric Analysis on Mobile Payment Transactions and Traditional Banks Effort toward Financial Accessibility in Sub-Sahara Africa

2020 ◽  
Vol 12 (3) ◽  
pp. 895 ◽  
Author(s):  
Cephas Paa Kwasi Coffie ◽  
Hongjiang Zhao ◽  
Isaac Adjei Mensah
Keyword(s):  
Time Series Data ◽  
Unit Root Test ◽  
Panel Cointegration ◽  
Ordinary Least Squares ◽  
Sustainable Growth ◽  
Series Data ◽  
Mobile Payment ◽  
Cross Sectional ◽  
Mobile Payments ◽  
Long Run

The financial landscape of sub-Sahara Africa is undergoing major changes due to the advent of FinTech, which has seen mobile payments boom in the region. This paper examines the salient role of mobile payments in traditional banks’ drive toward financial accessibility in sub-Sahara Africa by using panel econometric approaches that consider the issues of independencies among cross-sectional residuals. Using data from the World Development Index (WDI) 2011–2017 on 11 countries in the region, empirical results from cross-sectional dependence (CD) tests, panel unit root test, panel cointegration test, and the fully modified ordinary least squares (FMOLS) approach indicates that (i) the panel time series data are cross-sectionally independent, (ii) the variables have the same order of integration and are cointegrated, and (iii) growth in mobile payment transactions had a significant positive relationship with formal account ownership, the number of ATMs, and number of new bank branches in the long-run. The paper therefore confirms that the institutional structure of traditional banks that makes them competitive, irrespective of emerging disruptive technologies, has stimulated overall financial accessibility in the region leading to overall sustainable growth in the financial sector. We conclude the paper with feasible policy suggestions.

scholarly journals Implications of Governance, Natural Resources, and Security Threats on Economic Development: Evidence from Sub-Saharan Africa

2021 ◽  
Vol 18 (12) ◽  
pp. 6236
Author(s):  
Husam Rjoub ◽  
Chuka Uzoma Ifediora ◽  
Jamiu Adetola Odugbesan ◽  
Benneth Chiemelie Iloka ◽  
João Xavier Rita ◽  
...  
Keyword(s):  
Economic Development ◽  
Natural Resources ◽  
Causal Effect ◽  
Sub Saharan Africa ◽  
Security Threats ◽  
African Countries ◽  
Significance Level ◽  
Long Run ◽  
Short Run ◽  
Sub Saharan

Sub-Saharan African countries are known to be bedeviled with some challenges hindering the economic development. Meanwhile, some of these issues have not been exhaustively investigated in the context of the region. Thus, this study aimed at investigating the implications of government effectiveness, availability of natural resources, and security threats on the regions’ economic development. Yearly data, spanning from 2007 to 2020, was converted from low frequency (yearly) to high frequency (quarterly) and utilized. Data analysis was conducted using Dynamic heterogeneous panel level estimators (PMG and CS-ARDL). Findings show that while PMG estimator confirms a long-run causal effect of governance, natural resources, and security threats on economic development, only natural resources show a short-run causal effect with economic development, while the CS-ARDL (model 2) confirms the significance of all the variables both in the long and short-run. Moreover, the ECT coefficients for both models were found to be statistically significant at less than 1% significance level, which indicates that the systems return back to equilibrium in case of a shock that causes disequilibrium, and in addition, reveals a stable long-run cointegration among the variables in the model. Finally, this study suggests that the policy makers in SSA countries should place more emphasis on improving governance, managing security challenges, and effectively utilizing rents from the natural resources, as all these have severe implications for the economic development of the region if not addressed.

scholarly journals Analysis of the New Kuznets Relationship: Considering Emissions of Carbon, Methanol, and Nitrous Oxide Greenhouse Gases—Evidence from EU Countries

2021 ◽  
Vol 18 (6) ◽  
pp. 2907
Author(s):  
Mara Madaleno ◽  
Victor Moutinho
Keyword(s):  
Nitrous Oxide ◽  
Least Squares ◽  
Fixed Effects ◽  
Ghg Emissions ◽  
Ordinary Least Squares ◽  
Kuznets Curve ◽  
Ekc Hypothesis ◽  
Long Run ◽  
Short Run ◽  
The Eu

Decreased greenhouse gas emissions (GHG) are urgently needed in view of global health threat represented by climate change. The goal of this paper is to test the validity of the Environmental Kuznets Curve (EKC) hypothesis, considering less common measures of environmental burden. For that, four different estimations are done, one considering total GHG emissions, and three more taking into account, individually, the three main GHG gases—carbon dioxide (CO2), nitrous oxide (N2O), and methane gas (CH4)—considering the oldest and most recent economies adhering to the EU27 (the EU 15 (Old Europe) and the EU 12 (New Europe)) separately. Using panel dynamic fixed effects (DFE), dynamic ordinary least squares (DOLS), and fully modified ordinary least squares (FMOLS) techniques, we validate the existence of a U-shaped relationship for all emission proxies considered, and groups of countries in the short-run. Some evidence of this effect also exists in the long-run. However, we were only able to validate the EKC hypothesis for the short-run in EU 12 under DOLS and the short and long-run using FMOLS. Confirmed is the fact that results are sensitive to models and measures adopted. Externalization of problems globally takes a longer period for national policies to correct, turning global measures harder and local environmental proxies more suitable to deeply explore the EKC hypothesis.

scholarly journals Cross-section instability in financial markets: impatience, extrapolation, and switching

2021 ◽  
Author(s):  
Roberto Dieci ◽  
Xue-Zhong He
Keyword(s):  
Financial Markets ◽  
Cross Section ◽  
Asset Price ◽  
Asset Market ◽  
Long Run ◽  
Short Run ◽  
And Performance ◽  
Equilibrium Market ◽  
High Degree ◽  
Fundamental Price

AbstractThis paper presents a stylized model of interaction among boundedly rational heterogeneous agents in a multi-asset financial market to examine how agents’ impatience, extrapolation, and switching behaviors can affect cross-section market stability. Besides extrapolation and performance based switching between fundamental and extrapolative trading documented in single asset market, we show that a high degree of ‘impatience’ of agents who are ready to switch to more profitable trading strategy in the short run provides a further cross-section destabilizing mechanism. Though the ‘fundamental’ steady-state values, which reflect the standard present-value of the dividends, represent an unbiased equilibrium market outcome in the long run (to a certain extent), the price deviation from the fundamental price in one asset can spill-over to other assets, resulting in cross-section instability. Based on a (Neimark–Sacker) bifurcation analysis, we provide explicit conditions on how agents’ impatience, extrapolation, and switching can destabilize the market and result in a variety of short and long-run patterns for the cross-section asset price dynamics.

Military Expenditures and Economic Growth in Central and Eastern EU Countries: Evidence from the Post-Cold War Era

2017 ◽  
Vol 25 (3) ◽  
pp. 453-462 ◽  
Author(s):  
Mert Topcu ◽  
İlhan Aras
Keyword(s):  
Economic Growth ◽  
Panel Cointegration ◽  
Eastern European ◽  
The European Union ◽  
New Members ◽  
Post Cold War ◽  
Long Run ◽  
Short Run ◽  
Military Expenditures ◽  
Eastern European Countries

Although the relationship between military expenditures and economic growth is well documented for the old members of the European Union, empirically little is known for the new members. Thus, the goal of this paper is to investigate the economic impact of military expenditures in Central and Eastern European countries employing panel cointegration and causality methods for the period 1993–2013. Findings indicate that the variables in question do not move together in the long run and the direction of causality in the short run is from economic growth to military expenditures. The implications of the results for international relations are discussed.

THE IMPACT OF RESEARCH AND DEVELOPMENT INVESTMENT ON AGRICULTURAL SECTOR PERFOMANCE IN KENYA

2017 ◽  
Vol 2 (1) ◽  
pp. 34-57
Author(s):  
John Githii Kimani ◽  
Dr. George Ruigu Ruigu
Keyword(s):  
Research And Development ◽  
Agricultural Sector ◽  
Research Policy ◽  
Trade Openness ◽  
Policy And Practice ◽  
Long Run ◽  
Short Run ◽  
The Government ◽  
Parsimonious Model ◽  
The Impact

Purpose: The purpose of the study was to assess the impact of research and development investment/expenditure on the agricultural sector performance in Kenya.Methodology: The study took the peoples impact assessment direction. The data for this study was collected from various government agencies such as KARI, ASTI, Kenya Agricultural Sector Data compendium website, FAOSTAT, World Bank among others. Co-integration and error correction modeling methods were used in analyzing the data for this study.Results: Co-integration results for both the parsimonious and non-parsimonious model indicated that that there is a long-run relationship among the variables in the agriculture performance in Kenya. Further, findings in this study indicated that the variables under study were insignificant determinants of the long run Total Factor Productivity of the agricultural sector.  Meanwhile, Trade openness was the only significant determinant of the short run agricultural Total Factor Productivity.Unique Contribution to Policy and Practice: This study recommends the institutionalization of policies aimed at ensuring interaction between the various stakeholders in the agricultural sectors. This interaction will ensure that resources are better allocated to reduce duplication of research and dissemination activities. In addition, greater collaboration among the stakeholders will promote and strengthen the connection between research, policy and the application of research findings. The study further advocates that the government should follow a trade liberazation oriented approach to the agricultural sector as opposed to a trade tightening approach.

scholarly journals Role of Information and Communication Technology, Foreign Direct Investment and Trade Openness in Environmental Sustainability

2021 ◽  
Vol 7 (2) ◽  
pp. 263-272
Author(s):  
Sulaman Hafeez Siddiqui ◽  
Sohail Saeed ◽  
Areeba Khan ◽  
Hina Bhatti
Keyword(s):  
Co2 Emissions ◽  
Information And Communication Technologies ◽  
Environmental Sustainability ◽  
Trade Openness ◽  
Communication Technologies ◽  
Fdi Inflows ◽  
Long Run ◽  
Short Run ◽  
Information And Communication ◽  
The Government

Purpose: The benefits of Information and Communication Technologies (ICTs) in environmental resource management has been a topic of hot discussion for the policymakers across the world.  For the purpose, the government of Pakistan took initiative in 2018 to use technology for the country’s social welfare, financial benefits and to enhance environmental sustainability and named it as “Digital Pakistan Initiative”.Design/Methodology/Approach: For analysis, this study took CO2 emissions as the dependent variable and ICT, FDI inflows, and Trade Openness as independent variables. Data were collected on bimonthly basis from 2004 through 2019, and analyzed employing ARDL approach. Main purpose of the study was to examine the short-run and long-run relationship among carbon emissions and ICT, FDI Inflows and Trade Openness.Findings: The findings show that there exists a short-run relationship among all the variables; however, FDI inflows and trade openness have a significant relationship with CO2 emissions. The results also exhibit that there is no long-run relationship between CO2 emissions, FDI inflows, and Trade openness while ICT has an insignificant long-run relationship with CO2 emissions. With the increase of information and communication, the country’s environmental sustainability is also increased. Implications/Originality/Value: The current study was based on least considered variables and the pioneer in testing the complex relationship through VAR estimation.

scholarly journals The Impact of Industrialization, Trade Openness, Financial Development, and Energy Consumption on Economic Growth in Indonesia

Economies ◽  
2021 ◽  
Vol 9 (4) ◽  
pp. 174
Author(s):  
Khalid Eltayeb Elfaki ◽  
Rossanto Dwi Handoyo ◽  
Kabiru Hannafi Ibrahim
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Least Squares ◽  
Financial Development ◽  
Correction Term ◽  
Trade Openness ◽  
Ordinary Least Squares ◽  
Distributed Lag ◽  
Long Run ◽  
The Impact

This study aimed to scrutinize the impact of financial development, energy consumption, industrialization, and trade openness on economic growth in Indonesia over the period 1984–2018. To do so, the study employed the autoregressive distributed lag (ARDL) model to estimate the long-run and short-run nexus among the variables. Furthermore, fully modified ordinary least squares (FMOLS), dynamic least squares (DOLS), and canonical cointegrating regression (CCR) were used for a more robust examination of the empirical findings. The result of cointegration confirms the presence of cointegration among the variables. Findings from the ARDL indicate that industrialization, energy consumption, and financial development (measured by domestic credit) positively influence economic growth in the long run. However, financial development (measured by money supply) and trade openness demonstrate a negative effect on economic growth. The positive nexus among industrialization, financial development, energy consumption, and economic growth explains that these variables were stimulating growth in Indonesia. The error correction term indicates a 68% annual adjustment from any deviation in the previous period’s long-run equilibrium economic growth. These findings provide a strong testimony that industrialization and financial development are key to sustained long-run economic growth in Indonesia.

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