Effectiveness of bilateral and multilateral concessional debts on economic growth in Africa

2019 ◽  
Vol 15 (2) ◽  
pp. 344-361 ◽  
Author(s):  
Hillary Chijindu Ezeaku ◽  
Obiamaka P. Egbo ◽  
Ifeoma Nwakoby ◽  
Josaphat U.J. Onwumere
Keyword(s):  
Economic Growth ◽  
Negative Impact ◽  
Positive Impact ◽  
Empirical Studies ◽  
Relative Effectiveness ◽  
Equilibrium Path ◽  
Content Type ◽  
Distributed Lag ◽  
Long Run ◽  
Long Run Equilibrium

Purpose The purpose of this paper is to assess the relative effectiveness of bilateral and multilateral concessional debts on economic growth in 32 sub-Saharan African (SSA) countries over the period 1985–2016. Design/methodology/approach The recently developed dynamic panel autoregressive distributed lag models which comprise three different estimators, the mean group, pooled mean group (PMG) estimator and dynamic fixed effect, were applied to estimate the model. Following these estimators, the Hausman test was employed to determine the efficient and consistent estimator. Findings The results showed that bilateral concessional debts had a negative impact on growth. From the findings, a 1 percent increase in bilateral concessional debts induced economic growth to decline by 38.1 percent points in the short run, and by 7.1 percent points in the long run; convergence to long-run equilibrium adjusted at the speed of 90 percent on an annual basis. Multilateral concessional debts were found to have a positive impact on growth both in the short and long run. The coefficient of the error term was negatively signed and indicates that deviations from the long-run equilibrium path were being corrected at the speed of 89.4 percent annually. Originality/value To the authors’ best knowledge, empirical studies that specifically seek to examine how bilateral and multilateral concessional debts impacted on growth are yet to attract the attention of researchers. As a result, this study will complement related extant growth studies, especially in the case of SSA.

The effectiveness of government expenditure on economic growth in Botswana

2019 ◽  
Vol 10 (3) ◽  
pp. 368-384 ◽  
Author(s):  
Kafayat Amusa ◽  
Mutiu Abimbola Oyinlola
Keyword(s):  
Economic Growth ◽  
Government Spending ◽  
Negative Impact ◽  
Positive Impact ◽  
Government Expenditure ◽  
Public Spending ◽  
Empirical Literature ◽  
Content Type ◽  
Long Run ◽  
Short Run

Purpose The purpose of this paper is to examine the relationship between government expenditure and economic growth in Botswana over the period 1985‒2016. The study employed the auto-regressive distributed lag (ARDL) bounds testing approach in investigating the nexus. The study makes the argument that the effectiveness of public spending should be assessed not only against the amount of the expenditure but also by the type of the expenditure. The empirical findings showed that aggregate expenditure has a negative short-run and positive long-run effect on economic growth. When expenditure is disaggregated, both forms of expenditures have a positive short-run effect on economic growth, whereas only a long-run positive impact of recurrent expenditure is observed. The study suggests the need to prioritize scarce resources in productive recurrent and development spending that enables increased productivity. Design/methodology/approach This study examined the effectiveness of government spending in Botswana, within an ARDL framework from 1985 to 2016. To achieve this, the analysis is carried out on both an aggregate and disaggregated level. Government spending is divided into recurrent and development expenditures. Findings This study examined the effectiveness of government spending in Botswana, within an ARDL framework from 1985 to 2016. To achieve this, the analysis hinged on both the aggregate and disaggregated levels. The results of the aggregate analysis suggest that total public expenditure has a negative impact on economic growth in the short run; however, its impact becomes positive over the long run. On disaggregating government spending, the results show that both recurrent and development expenditures have a significant positive short-run impact on growth; however, in the long run, the significant positive impact is only observed for recurrent expenditure. Practical implications The results provide evidence of the diverse effects of government expenditure in the country. In the period under investigation, 73 percent of total government expenditure in Botswana was recurrent in nature, whereas 23 percent was related to development. From the results, it can be observed that although the recurrent expenditure has contributed to increased growth and must be encouraged, it is also pertinent for the Botswana Government to endeavor to place more emphasis on productive development expenditure in order to enhance short- and long-term growth. Further, there is a need to strengthen the growth-enhancing structures and to prioritize the scarce economic resources toward productive spending and ensuring continued proper governance over such expenditures. Originality/value The study provides empirical evidence on the effectiveness of government spending in a small open, resource-reliant middle-income SSA economy and argues that the effectiveness of public spending must be assessed not only against the amount of the expenditure but also on the type or composition of the expenditure. The study contributes to the scant empirical literature on Botswana by employing the ARDL approach to cointegration technique in estimating the long- and short-run impact of government expenditure on economic growth between 1985 and 2016.

Trade openness, financial liberalization and economic growth

2017 ◽  
Vol 6 (3) ◽  
pp. 229-246 ◽  
Author(s):  
Rana Muhammad Adeel-Farooq ◽  
Nor Aznin Abu Bakar ◽  
Jimoh Olajide Raji
Keyword(s):  
Economic Growth ◽  
Financial Liberalization ◽  
Positive Impact ◽  
Trade Openness ◽  
Principal Component ◽  
Content Type ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Comparison Of The Results

Purpose The purpose of this paper is to empirically examine the effects of financial liberalization and trade openness on the economic growth of two countries, namely, Pakistan and India for the period 1985-2014. Design/methodology/approach This study uses the autoregressive distributed lag technique, which allows mixed order of integration. In addition, it uses the principal component method to create an index for financial liberalization to examine how it affects the economic growth of the selected countries. Findings The findings reveal that in the short and long run, trade openness has positive effect on the Pakistan’s economic growth while the financial liberalization has positive impact only in the long run. In the case of India, both financial liberalization and trade openness positively and significantly influence the economic growth in the short and long run. Practical implications By comparing the results of both countries, trade openness and financial liberalization increase the economic growth of India more than that of Pakistan. These results suggest that Pakistan should consider appropriate positive policies regarding financial liberalization and trade openness to achieve high and stable economic growth in the future. Originality/value This study creates financial liberalization index by using the principal component analysis method to explain the role of financial liberalization in the economic growth of Pakistan and India. In addition, it makes comparison of the results based on which country benefits most from the liberalization of trade and financial sectors. Only very few studies have examined these countries, yet their results have remained inconclusive as well.

scholarly journals The Relationship between Democracy and Economic Growth in Tunisia: An Application of Autoregressive Distributed Lag Model

2016 ◽  
Vol 4 (1) ◽  
pp. 137
Author(s):  
Lamia Arfaoui ◽  
Azza Ziadi ◽  
Sonia Manai
Keyword(s):  
Economic Growth ◽  
Negative Impact ◽  
Empirical Studies ◽  
Distributed Lag ◽  
Distributed Lag Model ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Lag Model ◽  
The Relationship

This paper aims to identify the nature of the relationship between democracy and economic growth. We will answer the question: Does democracy improve economic growth? We study the case of Tunisia during the period from 1980 until 2014; this country has experienced a democratic transition after the revolution of 14 th January 2011. Our study is divided into two parts. The first part is a literature review of overview on the causality between democracy and economic growth. The second part as an application uses the Autoregressive Distributed Lag Model (ARDL). The choice of the technical SARL aimed the study of the existence of a long-run equilibrium relationship between two variables in level, a procedure co-integration has been proposed by Pesaran et al (2001). The results of different empirical studies were inconclusive. Some generated a negative impact of democracy on growth while others showed the opposite. The empirical results of our work have shown that in a nascent democracy such is the case of Tunisia; democracy has no effect on economic growth in the short term.  It is to add an observation rate of GDP during the period post -revolution generated a sawtooth trend which demonstrates the unstable economic situation in the country.

Financial development and economic growth: empirical evidence from India

2015 ◽  
Vol 32 (3) ◽  
pp. 340-356 ◽  
Author(s):  
Madhu Sehrawat ◽  
A K Giri
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Positive Impact ◽  
Annual Data ◽  
Content Type ◽  
Distributed Lag ◽  
Long Run ◽  
Integration Test ◽  
Short Run ◽  
Sustainable Economic Growth

Purpose – The purpose of this paper is to examine the relationship between financial development and economic growth in India using annual data from 1982 to 2012. Design/methodology/approach – The stationarity properties are checked by ADF, DF-GLS, KPSS and Ng–Perron unit root tests. The long- and short-run dynamics are examined by using the autoregressive distributed lag (ARDL) approach to co-integration. Findings – The co-integration test confirms a long-run relationship in financial development and economic growth for India. The analysis of ARDL test results reveals that both bank-based and market-based indicators of financial development have a positive impact on economic growth in India. Hence, the results support the supply-leading hypothesis and highlight the importance of financial development in economic growth. The findings also indicate that the Indian bank-centric financial sector has the potential for economic growth through credit transmission. Research limitations/implications – The present study recommends appropriate reforms in financial markets to attain sustainable economic growth. The findings are useful for policy-makers who want to maintain a parallel expansion of financial development and growth. Originality/value – To date, there are hardly any studies that use both market-based and bank-based indicators as proxies of financial development and analyze their role in economic growth in India. So, the contribution of the paper is to fill this gap in literature.

Finance-institution-growth trilogy: time-series insights from South Africa

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Clement Olalekan Olaniyi ◽  
Adebayo Adedokun
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Positive Impact ◽  
Institutional Quality ◽  
Empirical Examination ◽  
Content Type ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Impact

PurposeThis study examines the moderating effect of institutional quality on the finance-growth nexus in South Africa from 1986 to 2015.Design/methodology/approachThis study adopts unit root tests, cointegration test and autoregressive distributed lag (ARDL) model.FindingsThe findings reveal that institutional quality constitutes a drain to the growth benefits of financial development (FD) in South Africa in the short-run while FD and institutional quality converge to enhance growth process of the country in the long-run. Also, the threshold of institutional quality beyond which institution stimulates strong positive impact of finance on growth is estimated to be 6.42 on a 10-point scale.Practical implicationsThis study, therefore, suggests that institutional quality matters in the way FD influences economic growth in South Africa. Hence, stakeholders are encouraged to trace and block lapses and loopholes in the institutional framework guiding financial system in South Africa so as to maximize growth benefits of FD.Originality/valueThis study contributes to the extant studies by introducing a country-specific analysis into the empirical examination of how institutional quality influences the impact of FD on economic growth. Also, this study deviates from other studies by determining the threshold of institutional quality beyond which FD stimulates strong positive effect on economic growth in South Africa

scholarly journals Globalization, Country Risks, and Trade in Tourism Services: Evidence from China

2020 ◽  
Vol 12 (14) ◽  
pp. 5869
Author(s):  
Wenwen Zhang ◽  
Yi-Bin Chiu
Keyword(s):  
Negative Impact ◽  
Positive Impact ◽  
Equilibrium Path ◽  
Service Trade ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Significant Negative Impact ◽  
Short Run ◽  
Tourism Service

This study applies the autoregressive distributed lag (ARDL) model to examine the impacts of globalization and country risks on China’s tourism service trade over the period 1984–2015. The results reveal that in the long run, globalization has a significant negative impact on tourism service exports and tourism service trade balances, while a significant positive impact on tourism service imports. In the short run, globalization has a significant negative impact on tourism service imports, while a significant positive impact on tourism service exports and trade balances. Country stability could roughly mitigate these negative and positive impacts of globalization on tourism service trade in both the short and long run. Moreover, the speed of adjustment from the short run to long run equilibrium path is relatively fast. These results are important for China’s policy makers when formulating a strategy for the development of tourism service trade.

Fish Exports and Economic Growth: The Pakistan’s Experience

2019 ◽  
Vol 20 (2) ◽  
pp. 279-296 ◽  
Author(s):  
Syed Tehseen Jawaid ◽  
Mohammad Haris Siddiqui ◽  
Zeeshan Atiq ◽  
Usman Azhar
Keyword(s):  
Economic Growth ◽  
Time Series Data ◽  
Positive Impact ◽  
Impulse Response Function ◽  
Policy Implications ◽  
Sensitivity Analyses ◽  
Series Data ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run

This study attempts to explore first time ever the relationship between fish exports and economic growth of Pakistan by employing annual time series data for the period 1974–2013. Autoregressive distributed lag and Johansen and Juselius cointegration results confirm the existence of a positive long-run relationship among the variables. Further, the error correction model reveals that no immediate or short-run relationship exists between fish exports and economic growth. Different sensitivity analyses indicate that initial results are robust. Rolling window analysis has been applied to identify the yearly behaviour of fish exports, and it remains negative from 1979 to 1982, 1984 to 1988, 1993 to 1999, 2004 and from 2010 to 2013, and it shows positive impact from 1989 to 1992, 2000 to 2003 and from 2005 to 2009. Furthermore, the variance decomposition method and impulse response function suggest the bidirectional causal relationship between fish exports and economic growth. The findings are beneficial for policymakers in the area of export planning. This study also provides some policy implications in the final section.

The relationship between financial development and economic growth in Eswatini (formerly Swaziland)

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Siphe-okuhle Fakudze ◽  
Asrat Tsegaye ◽  
Kin Sibanda
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Financial Development ◽  
Granger Causality Test ◽  
Causality Test ◽  
Content Type ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Relationship

PurposeThe paper examined the relationship between financial development and economic growth for the period 1996 to 2018 in Eswatini.Design/methodology/approachThe Autoregressive Distributed Lag bounds test (ARDL) was employed to determine the long-run and short-run dynamics of the link between the variables of interest. The Granger causality test was also performed to establish the direction of causality between financial development and economic growth.FindingsThe ARDL results revealed that there is a long-run relationship between financial development and economic growth. The Granger causality test revealed bidirectional causality between money supply and economic growth, and unidirectional causality running from economic growth to financial development. The results highlight that economic growth exerts a positive and significant influence on financial development, validating the demand following hypothesis in Eswatini.Practical implicationsPolicymakers should formulate policies that aims to engineer more economic growth. The policies should strike a balance between deploying funds necessary to stimulate investment and enhancing productivity in order to enliven economic growth in Eswatini.Originality/valueThe study investigates the finance-growth linkage using time series analysis. It determines the long-run and short-run dynamics of this relationship and examines the Granger causality outcomes.

Relationship between Budget Deficit and Economic Growth: Evidence from Ethiopia

2021 ◽  
Vol 2 (2) ◽  
pp. 10-15
Author(s):  
Desalegn Emana
Keyword(s):  
Economic Growth ◽  
Interest Rates ◽  
Budget Deficit ◽  
Time Series Data ◽  
Negative Impact ◽  
Positive Impact ◽  
Negative Relationship ◽  
Nominal Exchange Rate ◽  
Series Data ◽  
Long Run

This study examined the relationship between budget deficit and economic growth in Ethiopia using time series data for the period 1991 to 2019 by applying the ARDL bounds testing approach. The empirical results indicate that budget deficit and economic growth in Ethiopia have a negative relationship in the long run, and have a weak positive association in the short run. In line with this, in the long run, a one percent increase in the budget deficit causes a 1.43 percent decline in the economic growth of the country. This result is consistent with the neoclassical view which says budget deficits are bad for economic growth during stimulating periods. Moreover, in the long run, the variables trade openness and inflation have a positive impact on Ethiopian economic growth, and on the other hand, the economic growth of Ethiopia is negatively affected by the nominal exchange rate in the long run. Apart from this, in the long run, gross capital formation and lending interest rates have no significant impact on the economic growth of the country. Therefore, the study recommends the government should manage its expenditure and mobilize the resources to generate more revenue to address the negative impact of the budget deficit on economic growth.

scholarly journals Impact of Domestic Public Debt on Economic Growth - An Empirical Study in the Indian Context

2016 ◽  
Vol 6 (4) ◽  
pp. 101-116
Author(s):  
Srinivasa Rao Gangadharan ◽  
Lakshmi Padmakumari
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Positive Impact ◽  
Least Square ◽  
Distributed Lag ◽  
Long Run ◽  
Domestic Debt ◽  
Integration Test ◽  
Ordinary Least Square Regression ◽  
The Impact

This study is an empirical investigation to assess the impact of domestic debt on India’s Economic growth during the period 1980 – 2014. We use data on Domestic Debt, Net Fiscal Deficit, Exports, Savings, Real Gross Domestic Product, Population and Terms of Trade. This study adopts the ARDL Co-Integration and Granger Causality techniques to investigate the relation between the key variables. The study also employs various post estimation tests to validate the fitness and stability of the models based on Gauss Markov assumptions, after employing the ordinary least square regression on various models. We find that debt negatively impacts economic growth while savings has a positive impact. The Auto Regressive Distributed Lag (ARDL) technique used to test the robustness suggests existence of co-integration among the variables. However, none of the long run co-efficient is significant. The granger causality and co-integration test results support the traditional view that debt negatively impacts economic growth.

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