Optimal tariffs in a two-country R&D-based growth model

2021 ◽  
pp. 1-25
Author(s):  
Hamid Beladi ◽  
Ping-ho Chen ◽  
Hsun Chu ◽  
Ching-chong Lai ◽  
Ting-wei Lai
Keyword(s):  
Nash Equilibrium ◽  
Growth Model ◽  
Home Country ◽  
Government Expenditure ◽  
Theoretical Explanation ◽  
Tariff Policy ◽  
Long Run ◽  
Negative Effect ◽  
The Government ◽  
Optimal Tariffs

Abstract This paper examines the effect of a tariff on long-run growth and welfare in a two-country innovation-led growth model. We show that although raising the home country’s tariff reduces the growth and GDP of the foreign country, it will backfire by depressing R&D and growth of the home country. The Nash equilibrium tariffs can be positive, and they are larger when the government expenditure is more beneficial to private production and/or when the productivity of innovation is higher. The presence of positive Nash equilibrium tariffs provides a theoretical explanation for why countries have incentives to implement a tariff policy regardless of its negative effect on growth. Finally, the Nash equilibrium tariffs are higher than the globally optimal tariffs, that is, the levels that maximize the joint welfare of both countries.

scholarly journals Fiscal Policy Shocks and Private Consumption in Nigeria: Blanchard-Perotti (2002) Approach

2015 ◽  
Vol 7 (6(J)) ◽  
pp. 42-60
Author(s):  
OSENI Isiaq Olasunkanmi
Keyword(s):  
Fiscal Policy ◽  
Government Spending ◽  
Private Consumption ◽  
Government Expenditure ◽  
Structural Var ◽  
Long Run ◽  
Short Period ◽  
Policy Shocks ◽  
Negative Effect ◽  
The Government

This paper examines the effects of fiscal policy shocks on private consumption in Nigeria. Albeit, there is a considerable number of works examining the effects of fiscal policy shocks on private consumption globally but in Nigeria, no study has used the structural VAR approach by Blanchard and Perotti (2002) as used in this paper. This approach relies on institutional information about the tax and transfer systems and the timing of tax collection to identify the automatic response of taxes and spending to private consumption as well as to infer fiscal shocks. The key result of this paper is that positive government spending shocks in Nigeria have an instantaneous negative effect on private consumption. The effect becomes significant in the period following the shock. Also, positive tax shocks have a negative effect on private consumption in the period of a shock and the effect becomes statistically insignificant afterwards. On this premises, one-off changes in government spending and taxes in Nigeria are long-lived and short-lived respectively. Thus, the government expenditure changes can be used to support private consumption in the long-run while that of taxes can only be used to support private consumption for a short period.

scholarly journals Cotton Imports and GDP of Indonesia- Cointegration Analysis

2021 ◽  
pp. 149-154
Author(s):  
P. Soumya ◽  
R. A. Yeledhalli
Keyword(s):  
High Speed ◽  
Cointegration Analysis ◽  
Causality Analysis ◽  
The Real ◽  
Real Gdp ◽  
Use Of Technology ◽  
Long Run ◽  
Negative Effect ◽  
The Government ◽  
The Impact

The study examines the impact of cotton imports on the real GDP (Gross Domestic Product) of Indonesia for a period from 1992 to 2018 using ARDL approach and Granger causality analysis. Results of the study indicated that cotton imports have negative effect on economic growth. For every 1% increase in cotton imports the real GDP decreased by 0.107% in the long run. Any disequilibrium in the model is adjusted with a high speed of adjustment of 107.7% in less than a year. Shocks and the trend are adjusted in less than one year. There is no causality between imports of cotton and the real GDP. The study suggested effort should be taken by the government to increase yield of cotton by the use of technology and also a need to initiate farmers to take up cotton farming. 

PENGUJIAN WAGNER'S LAW VERSUS KEYNESIAN HYPOTHESIS: PENDEKATAN REGIONAL INDONESIA

2021 ◽  
Vol 2 (2) ◽  
pp. 181-193
Author(s):  
Esti Pasaribu ◽  
Septriani Septriani
Keyword(s):  
Government Expenditure ◽  
Granger Causality Test ◽  
Empirical Theory ◽  
Causality Test ◽  
Wagner’S Law ◽  
Long Run ◽  
Wagner's Law ◽  
The Government ◽  
The Relationship ◽  
Positive Effect

In this paper, we tested the Wagner’s Law against the Keynesian Hypothesis for Indonesia using granger causality test. After conducting theoretical and empirical theory, this paper is analysing the relationship between government expenditure and GDP percapita. The long run parameters and causality test found valid Wagners’ Law in Indonesia not Keynesian Hypothesis. The results reveal a positive and statistically significant long run effect running from economic growth toward the government expenditure refer to Wagner’s Law in Indonesia. Further more, the growth of population is giving a positive effect for government expenditure also.

scholarly journals The Impact of Tourism Development on Economic Development: The Case of Zanzibar

2021 ◽  
pp. 41-50
Author(s):  
Hafidh Ali Hafidh ◽  
Zulekha Ayoub Rashid
Keyword(s):  
Economic Development ◽  
Government Expenditure ◽  
National Income ◽  
Tourism Development ◽  
Small Island ◽  
Stable Relationship ◽  
Long Run ◽  
Study Results ◽  
The Government ◽  
The Impact

Tourism is perceived as one of the world’s fastest growing service sectors and a major source of economic development for many, if not all, developing countries. Zanzibar as a developing country and also is a small island which have small economy, its national income depend much on tourism contribution, Therefore this paper aim to examine the impact of tourisms development to the economic development of Zanzibar, using the data based on annual time series from the period 1989–2019 and also employing Vector Error Correlation Model (VECM) to arrive at conclusions from the data in the study area. The study results found a long-run stable relationship among tourism development and economic development of Zanzibar, there is a positive and significant impact that exists between GDP and international tourism arrivals, inflation and government expenditure respectively while only inflation results show positive but insignificant impact. In order to increase the economic development in Zanzibar through the tourism sector, there is a need for the government and other stakeholders of tourism to put much consideration on this sector so as to improve overall development of Zanzibar economy.

scholarly journals Is the Compensation Hypothesis Valid for Turkey?

2015 ◽  
Author(s):  
Murat Can Genç ◽  
Osman Murat Telatar
Keyword(s):  
Trade Openness ◽  
Government Expenditure ◽  
The Other ◽  
Cointegration Test ◽  
Government Size ◽  
Annual Data ◽  
Correction Model ◽  
Long Run ◽  
The Government ◽  
Compensation Hypothesis

Increases of trade openness in an economy raise the external risks in globalization. The societies demand on increases of the government expenditure in order to compensate for their risks. Hence the more trade openness may cause the more government size. This relation is named as compensation hypothesis in the literature has been comprehensively discussed by Rodrik (1998) but started by Cameron (1978). This paper attempts to analyze the cointegration and causality relationships between trade openness and government size in Turkey, utilizing annual data for the period 1980–2013. The existence of the long run relationship between trade openness and government size is investigated by applying Engle and Granger (1987) cointegration test. The empirical findings of cointegration test stated that the series are cointegrated. On the other hand the results of error correction model indicate that there is a unidirectional causality from trade openness to government size. The significance of this results state that the compensation hypothesis is valid for Turkey.

scholarly journals Labour Force, National Savings and the Manufacturing Sector Productivity in Nigeria

2020 ◽  
Vol 64 (4) ◽  
pp. 459-473
Author(s):  
Adeyemi Babasanya ◽  
◽  
Olukayode Maku ◽  
Joseph Amaefule ◽  
◽  
...  
Keyword(s):  
Exchange Rate ◽  
Raw Materials ◽  
Manufacturing Sector ◽  
Labour Force ◽  
Industrial Sector ◽  
National Bureau ◽  
Growth And Survival ◽  
Long Run ◽  
Negative Effect ◽  
The Government

The study evaluated the role of sectoral labour force and the national savings on the manufacturing sector output in Nigeria from 1985 to 2019, a period of 35years. Data was sourced from Central Bank Of Nigeria (CBN) statistical bulletin various issues up until 2017, National Bureau of Statistics (NBS), and World Development Index (WDI). Data were analyzed using Vector Error Correction Model (VECM). The VECM result revealed that national savings and labour force have long run positive effect on the manufacturing sector output, while exchange rate and inflation have long-run negative effect on the manufacturing sector output. It could be deduced from this study that national savings, labour force in the industrial sector, inflation and exchange rate are very critical factors that determine the growth and survival of the manufacturing sector. Hence, it was recommended that the government look critically to the manufacturing sector and revamp the sector by making credit facility to the sector, and increase the use of domestic raw materials.

scholarly journals THE FACTORS INFLUENCING ECONOMIC GROWTH IN INDONESIA

2020 ◽  
Vol 8 (1) ◽  
Author(s):  
Dian Citra Amelia
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
International Trade ◽  
Direct Investment ◽  
Government Expenditure ◽  
Negative Influence ◽  
Positive Effects ◽  
Negative Effect ◽  
The Government ◽  
Positive Effect

This research is based on the fact that the state of economic growth in Indonesia tends to fluctuate, even more often decrease. This is because the government policy is not appropriate to improve the economic growth of Indonesia. This study aims to determine and analyze the factors of foreign direct investment, inflation, international trade, and government expenditure that affect economic growth in Indonesia. The problem in this research is due to the limited fund in economic development both structure and infrastructure so that economic growth tends to decrease. Therefore, appropriate strategies must be taken to overcome the limitations in promoting economic growth. From this problem, this research aims to see how big influence of foreign direct investment (FDI), inflation (INF), international trade (NX) and government expenditure (GE) variable to economic growth. The data used in this study is secondary data (periodical data) in the period of observation 1996-2014 obtained from the World Bank and Statistics of Indonesia. To identify the influence of the variables used in this study used the VAR (Vector Autoregression) method. The results of this study show that equation regression shows that FDI (-1) has a negative influence on economic growth and FDI (-2) has a positive effect on economic growth, INF (-1) and INF (-2) have positive effects on economic growth , Variable NX (-1) has a positive effect on economic growth but NX (-2) has a negative effect on economic growth, and GE variable (-1) has a positive effect on economic growth while GE (-2) has a negative effect on growth Economy.

scholarly journals Determinants of Indonesia’s National Income: An Auto-Regressive Distributed Lag Analysis

2020 ◽  
Vol 9 (2) ◽  
pp. 207-218
Author(s):  
Prihartini Budi Astuti ◽  
Nur Khasanah
Keyword(s):  
Economic Growth ◽  
Aggregate Demand ◽  
Government Expenditure ◽  
National Income ◽  
The United States ◽  
Jel Classification ◽  
Distributed Lag ◽  
Long Run ◽  
Auto Regressive ◽  
The Government

At the end of 2019, most countries experienced an economic slowdown due to a trade war between the United States and China. According to macroeconomic theory, aggregate demand is one of the factors that influence economic growth. This study aims to add the debate and fill the gap by studying the relationship between aggregate demand and economic growth in the case of Indonesia. Using an Auto-Regressive Distributed Lag analysis, the results indicate that in the long-run, household consumption and investment had a positive effect on Indonesia's national income in 2010-2019. It means that the government must continue to make policies to maintain the purchasing power of Indonesian consumers, so that public consumption remains high, and maintaining the investment climate to be more conducive. On the other hand, government expenditure and net exports variables have no impact on Indonesia's national income in 2010-2019.JEL Classification: E01, E12, O47How to Cite:Astuti, P. B., & Khasanah, N. (2020). Determinants of Indonesia’s National Income: An Auto-Regressive Distributed Lag Analysis. Signifikan: Jurnal Ilmu Ekonomi, 9(2), 207-218. https://doi.org/10.15408/sjie.v9i2.14469.

Does government expenditure reduce unemployment in Egypt?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hanan AbdelKhalik Abouelfarag ◽  
Rasha Qutb
Keyword(s):  
Unemployment Rate ◽  
Government Expenditure ◽  
Vital Role ◽  
Content Type ◽  
Vector Error Correction ◽  
Public Investments ◽  
Long Run ◽  
Johansen Cointegration Test ◽  
The Government ◽  
The Impact

PurposeThis research seeks to empirically examine the impact of government expenditure on the unemployment rate in Egypt during the period of 1980–2017. In addition, it examines whether the distinction between discretionary and nondiscretionary items of government expenditure have a different effect on unemployment.Design/methodology/approachThe study employs the Johansen cointegration test to ensure the long-run equilibrium relationship among the variables, then the vector error correction model (VECM) to explore the dynamic short and long-run effects.FindingsThe empirical results of this research reveal that increasing government expenditure causes an increase in the unemployment rate in the long-run. Both discretionary expenditures and nondiscretionary expenditures increase the growth of unemployment by approximately the same coefficient. The worsening impact of discretionary expenditures on unemployment is highly attributed to the compensation of employees and the government subsidies. Investment expenditure has an insignificant effect because of its minor percentage in government expenses.Practical implicationsRedirecting the unnecessary expenditures toward labor-intensive public investments is recommended, in addition to reducing domestic and foreign debts. The government has to work hard to increase the economic growth rate, as it has a vital role in reducing unemployment.Originality/valueThis study is one of the first attempts to analyze the effect of government expenditure on the unemployment rate in Egypt. Moreover, this research distinguishes between the effects related to discretionary and nondiscretionary items of government expenditure.

Does Infrastructure Matters in Government Spending? A Case Study of Jammu and Kashmir (India) with Cointegration Approach

2017 ◽  
Vol 9 (2) ◽  
pp. 82-97 ◽  
Author(s):  
Samir Ul Hassan ◽  
Biswambhara Mishra
Keyword(s):  
Government Spending ◽  
Time Series Data ◽  
Government Expenditure ◽  
Jel Classification ◽  
Series Data ◽  
Data Set ◽  
Jammu And Kashmir ◽  
Long Run ◽  
The Government ◽  
The Impact

This study is an attempt to investigate the impact of infrastructure level on government spending in short and long run and also to find the tendency of infrastructure level to stabilise any disequilibrium in government spending in long run. Infrastructure is related to the quality and quantity of goods and services provided by government to the population, to fulfil their diverse demands. The state of Jammu and Kashmir (J&K) is not an exception; the increasing trend in different aspects of population and rising needs and aspirations of the growing population forces the government to increase expenditure on that count, which results in increase in aggregate government spending. Using multivariate cointegration technique followed by vector error correction model (VECM) model on annual time-series data for the period from 1984 to 2013 with broader data set of infrastructure dimension, the study found that the infrastructure variables cause major variation in government expenditure in short as well as in long run. Study shows that infrastructure related to health, education, roads and portable water produce positive and significant impact on the growth of government spending and infrastructure related to these dimensions has significant tendency to stabilise any disequilibrium in government spending in long run. JEL Classification: H3, H5, H53, I

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