TAX REFORM AND ECONOMIC GROWTH NEXUS IN INDIA: EVIDENCE FROM THE COINTEGRATION AND ROLLING-WINDOW CAUSALITY

2020 ◽  
Vol 65 (06) ◽  
pp. 1699-1725
Author(s):  
NARAYAN SETHI ◽  
SAILEJA MOHANTY ◽  
SANHITA SUCHARITA ◽  
NANTHAKUMAR LOGANATHAN
Keyword(s):  
Economic Growth ◽  
Tax Reform ◽  
Petroleum Products ◽  
Causality Test ◽  
Long Run ◽  
Cointegration Tests ◽  
Rolling Window ◽  
Short Run ◽  
Taxation System ◽  
The Impact

This paper examines the impact of tax reform on the economic growth of India over the period 1975–2017. In order to measure the impact of tax reform on the economic growth, we have used various econometric tools like Maki and combined cointegration tests and the rolling-window causality test in this study. The study revealed that a stable long-run parameter stability relationship exists the series on tax reform but unable to obtain the short-run relationship. Results also revealed that growth-led taxation effects and tax-led-growth do not exist in India. Hence, India needs more policies which will help to remove inefficiencies created by the existing heterogeneous taxation system, revenue rate and inclusion of petroleum products, electricity, liquor and real estate and policymakers should adopt some policies for direct tax which reduce the imbalance in class.

scholarly journals TRADE OPENNESS AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM INDIA

2014 ◽  
Vol 16 (1) ◽  
pp. 188-205 ◽  
Author(s):  
Qazi Muhammad Adnan Hye ◽  
Wee-Yeap Lau
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Granger Causality ◽  
Trade Openness ◽  
Granger Causality Test ◽  
Causality Test ◽  
Long Run ◽  
Rolling Window ◽  
Short Run ◽  
The Impact

The main objective of this study is to develop first time trade openness index and use this index to examine the link between trade openness and economic growth in case of India. This study employs a new endogenous growth model for theoretical support, auto-regressive distributive lag model and rolling window regression method in order to determine long run and short run association between trade openness and economic growth. Further granger causality test is used to determine the long run and short run causal direction. The results reveal that human capital and physical capital are positively related to economic growth in the long run. On the other hand, trade openness index negatively impacts on economic growth in the long run. The new evidence is provided by the rolling window regression results i.e. the impact of trade openness index on economic growth is not stable throughout the sample. In the short run trade openness index is positively related to economic growth. The result of granger causality test confirms the validity of trade openness-led growth and human capital-led growth hypothesis in the short run and long run.

scholarly journals Zakat Distribution and Growth in the Federal Territory of Malaysia

2012 ◽  
Vol 4 (8) ◽  
pp. 449-456
Author(s):  
Mohammed B. Yusoff
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Causality Test ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Cointegration Tests ◽  
Causality Tests ◽  
Short Run ◽  
The Impact

This research paper aims to examine the impact of zakat distribution on growth in the Federal Territory Malaysia. Specifically, an econometric study is carried out to examine the ability of zakat expenditure to affect real economic growth in the Federal Territory Malaysia by employing various econometric procedures such as the unit root tests, the cointegration tests, the vector error-correction model (VECM), and the Granger causality tests. The findings of the study suggest that zakat expenditure has a positive relationship with real GDP in the long-run. The Granger causality test indicates that zakat spending causes real economic growth with no feedback. In other words, zakat expenditure could boost GDP in the Federal Territory Malaysia both in the short-run and long-run.

scholarly journals Does Stock Market Performance Affect Economic Growth? Empirical Evidence from Saudi Arabia

2019 ◽  
Vol 11 (9) ◽  
pp. 21 ◽  
Author(s):  
Moayad H. Al Rasasi ◽  
Soleman O. Alsabban ◽  
Omar A. Alarfaj
Keyword(s):  
Economic Growth ◽  
Empirical Evidence ◽  
Stock Prices ◽  
Causality Test ◽  
Steady State Condition ◽  
Long Run ◽  
Stock Market Performance ◽  
Cointegration Tests ◽  
The Impact

This research paper investigates the impact of stock prices on real economic activity in the Saudi Arabian economy. We utilize various econometric techniques – Johansen and Juselius’s (1990) cointegration tests and Granger’s (1969) causality test – to assess such a relationship, based on quarterly observations spanning the period from the first quarter of 2010 to the fourth quarter of 2018. Our empirical evidence indicates the presence of a significant cointegrating relationship between the two variables being examined; in other words, stock prices have a significant impact on real economic growth. Specifically, the estimated long-run relationship reveals that a 1 percent increase in stock prices would boost economic growth by 0.32 percent. In addition, the error correction model suggests that when the economy deviates from its steady state condition, it needs about a year and a half to return to its equilibrium condition. Lastly, this paper applies the most common Granger causality test, which confirms the essential role of stock prices in predicting changes in economic growth.

scholarly journals A Dynamic Analysis of the Impact of Fiscal Adjustment on Economic Growth: Evidence From Pakistan

SAGE Open ◽  
2021 ◽  
Vol 11 (2) ◽  
pp. 215824402110271
Author(s):  
Ibrar Hussain ◽  
Jawad Hussain ◽  
Arshad Ali ◽  
Shabir Ahmad
Keyword(s):  
Economic Growth ◽  
Causality Test ◽  
Distributed Lag ◽  
Fiscal Adjustment ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Empirical Calibration ◽  
Short Run ◽  
S Model ◽  
The Impact

This study claims to be the first in assessing the short-run and long-run impacts of both the size and composition of fiscal adjustment on the growth in Pakistan. Empirical calibration has been made on Mankiw et al.’s model, while the Autoregressive Distributed Lag (ARDL) techniques of Pesaran et al. have been employed to carry out the estimation. To cure the problem of degenerate cases, the ARDL techniques have been augmented with the model of Sam et al. The analysis supports the hypothesis of “expansionary fiscal contraction” in the long run. The analysis reveals that the spending-based adjustment enhances the economic growth, whereas the tax-based adjustment would reduce the growth in the long run in the case of Pakistan. The Granger causality test indicates that the fiscal adjustments have been weakly exogenous, thereby allowing feedback effect from the economic growth toward the fiscal adjustment. Thus, the objective of sustained economic growth can be achieved through the spending-based consolidation measures.

scholarly journals The nexus between external debt, corruption and economic growth: evidence from five SSA countries

2018 ◽  
Vol 9 (3) ◽  
pp. 319-334 ◽  
Author(s):  
Waliu Olawale Shittu ◽  
Sallahuddin Hassan ◽  
Muhammad Atif Nawaz
Keyword(s):  
Economic Growth ◽  
External Debt ◽  
Negative Relationship ◽  
Panel Cointegration ◽  
Causality Test ◽  
Content Type ◽  
Long Run ◽  
Cointegration Tests ◽  
The Impact ◽  
Ssa Countries

Purpose The purpose of this paper is to examine the impact of external debt and corruption on economic growth in the selected five Sub-Saharan African (SSA) countries, from 1990 to 2015. Design/methodology/approach Panel unit root and panel cointegration tests are employed to test for stationarity of the series and the long-run relationship, respectively. Fully modified OLS and dynamic OLS techniques are also employed to examine the long-run coefficients of the variables of the model, as well as panel Granger causality test, in order to examine the direction of causality among the variables. Findings The results indicate that there is a negative relationship between external debt and economic growth, as well as a bi-directional causality between the two variables. The findings also indicate a positive relationship between corruption and economic growth, as well as a uni-directional causality running from economic growth through corruption. Research limitations/implications The study recommends that the governments of the selected countries should address the menace of rising external debt through the adoption of other sources of capital for investment. Such include more openness of the economy for more capital, by easing restrictions on genuine imports and exports of valuable goods and services. It also suggests that the issue of corruption be tackled head-on, by such penalties that tend to make corruption less attractive. Originality/value While the relationship between economic growth and external debt, on the one hand, and corruption and economic growth, on the other hand, have received considerable attentions, the trio of external debt, corruption and economic growth have not been found combined in a model, to the best of the authors’ knowledge. Also, the countries under consideration, who jointly account for about 47 percent of the entire SSA countries’ stock of external debt, have not been jointly found in any recent panel studies involving the selected variables.

scholarly journals The Impact of Imports and Exports Performance on the Economic Growth of Somalia

2017 ◽  
Vol 10 (1) ◽  
pp. 110
Author(s):  
Ali Abdulkadir Ali ◽  
Ali Yassin Sheikh Ali ◽  
Mohamed Saney Dalmar
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Ordinary Least Squares ◽  
Growth Strategy ◽  
Causality Test ◽  
Econometric Methods ◽  
Long Run ◽  
Augmented Dickey Fuller ◽  
Short Run ◽  
The Impact

In this paper the impact of exports and imports on the economic growth of Somalia over the period 1970-1991 was investigated. The study applied econometric methods such as Ordinary Least Squares technique. The Granger Causality and Johansen Co-integration tests were also used for analysing the long term association. By using Augmented Dickey-Fuller (ADF) and Phillip-Perron (PP) stationarity test, the variables proved to be integrated of the order one 1(1) at first difference. Johansen test of co-integration was used to determine if there is a long run association in the variables. To determine the direction of causality among the variables, both in the long and short run, the Pair-wise Granger Causality test was carried out. It was found that economic growth does not Granger Cause Export but was found hat export Granger Cause GDP. So this implies that there is unidirectional causality between exports and economic growth. Also there is bidirectional Granger Causality between import and export. The results show that economic growth in Somalia requires export-led growth strategy as well as export led import. Imports and exports are thus seen as the source of economic growth in Somalia.

scholarly journals Impact of Exports and Imports on Economic Growth in Rwanda: 1961-2018

2020 ◽  
Author(s):  
Charles Ruranga ◽  
Daniel S. Ruturwa ◽  
Valens Rwema
Keyword(s):  
Economic Growth ◽  
Time Series Data ◽  
Series Data ◽  
Causality Test ◽  
Development Indicators ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Short Run ◽  
Annual Time Series ◽  
The Impact

Abstract The aim of this paper is to investigate the impact of trade on economic growth in Rwanda. This paper uses exports and imports for trade and gross domestic product for economic growth. Research questions were formulated as (1) Are exports, imports and economic growth cointegrated? (2) Is there a long or short run relationship between those Variables? (3) Are there any causal relationships between factors (4) what the direction of the causality is it? Annual time series data from World Development Indicators for the period from 1961 to 2018 have been used. The methods of linear regression for estimation of Vector Auto regressions models have been used. Our findings established that VAR was appropriate model, and GDP, Exports were stationary at first differences while Imports was stationary at second difference but not at levels. Hence the two series were integrated of order one and the third one was integrated of order two. Tests of cointegration indicates that the three variables were not cointegrated, implying there was no long run equilibrium relationship between the three series. The causality test indicated that exports and imports influenced GDP. On the other hand, we found that there was a strong evidence of unidirectional causality from exports to economic growth. However, there was bidirectional causality between GDP and imports. These results provide evidence that exports and imports, thus, were seen as the source of economic growth in Rwanda.

scholarly journals Estimating the Impact of Crop Diversification on Economic Growth in India: A Quantitative Assessment

2019 ◽  
Vol 8 (4) ◽  
pp. 5771-5776
Keyword(s):  
Economic Growth ◽  
Secondary Data ◽  
Crop Diversification ◽  
Income Generation ◽  
Causality Test ◽  
Long Run ◽  
Short Run ◽  
Generation Capacity ◽  
Diversification Mechanism ◽  
The Impact

Though agriculture is the mainstay in India, it accounts only 14 percent sectoral share in GDP. This is mainly because of low productivity and income generation capacity of agriculture. In this regard, crop diversification can act as a mechanism to eliminate this dilemma. It not only will increase the agricultural productivity but also will accelerate the income generation capacity. In this study we have investigated the impact of crop diversification on economic growth in India since 1988. The study is completely based on secondary data. In order to investigate the impact of crop diversification on economic growth, we have estimated Granger causality test based on vector error correction model setting. The results reveal that in India, there is no causality running from crop diversification to economic growth in the short-run. However, in the long-run crop diversification causes economic growth in India and the nature of cause is positive. Finally, the study concludes that suitable policies should be adopted to encourage the farmer to adopt the crop diversification mechanism. This will ultimately accelerate economic growth of the nation through increased income and employment in agriculture and reduction in poverty of the nation.

scholarly journals The Impact of Gender-Specific Human Capital on Economic Growth: An Empirical Investigation for Turkey

2018 ◽  
Vol 21 (s1) ◽  
pp. 15-30
Author(s):  
Hacer Simay Karaalp-Orhan
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Physical Capital ◽  
Bounds Testing ◽  
Causality Test ◽  
Arithmetic Average ◽  
Long Run ◽  
Short Run ◽  
Education Indicators ◽  
The Impact

Abstract In this study, how the human capital disaggregated by gender and physical capital affects economic growth in Turkey is examined for the period of 1971–2015. By using an arithmetic average of health and education indicators as a proxy of human capital formation, an attempt was made to examine the relationship between the human capital and economic growth under the scope of gender inequality. In this context, an ARDL-bounds testing approach and the unrestricted error-correction model were used to investigate the co-integration in the long- run and short run. Further, the causality test was also conducted to identify the direction of the causality between the variables. The main finding indicates that male human capital has been the central variable affected by both economic growth and physical capital. On one hand, a significant positive relationship was found between the economic growth and physical capital and male human capital in the long-run, while on the other hand, the female human capital was associated negatively to the economic growth. There is no evidence of causality that links the female human capital to other variables. This result suggests that women are not well utilized in the Turkish economy and the country suffers from untapped potential of women.

scholarly journals Economic Development, CO2 Emissions and Energy Use Nexus-Evidence from the Danube Region Countries

Energies ◽  
2021 ◽  
Vol 14 (11) ◽  
pp. 3165
Author(s):  
Eva Litavcová ◽  
Jana Chovancová
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Co2 Emissions ◽  
Carbon Emissions ◽  
Bounds Testing ◽  
Mutual Cooperation ◽  
Long Run ◽  
Short Run ◽  
Danube Region ◽  
The Impact

The aim of this study is to examine the empirical cointegration, long-run and short-run dynamics and causal relationships between carbon emissions, energy consumption and economic growth in 14 Danube region countries over the period of 1990–2019. The autoregressive distributed lag (ARDL) bounds testing methodology was applied for each of the examined variables as a dependent variable. Limited by the length of the time series, we excluded two countries from the analysis and obtained valid results for the others for 26 of 36 ARDL models. The ARDL bounds reliably confirmed long-run cointegration between carbon emissions, energy consumption and economic growth in Austria, Czechia, Slovakia, and Slovenia. Economic growth and energy consumption have a significant impact on carbon emissions in the long-run in all of these four countries; in the short-run, the impact of economic growth is significant in Austria. Likewise, when examining cointegration between energy consumption, carbon emissions, and economic growth in the short-run, a significant contribution of CO2 emissions on energy consumptions for seven countries was found as a result of nine valid models. The results contribute to the information base essential for making responsible and informed decisions by policymakers and other stakeholders in individual countries. Moreover, they can serve as a platform for mutual cooperation and cohesion among countries in this region.

Sign in / Sign up

Export Citation Format

Share Document