Revisited the Relationship Between Economic Growth and Transport Infrastructure in India: An Empirical Study

2021 ◽  
pp. 001946622110635
Author(s):  
Prabir Kumar Ghosh ◽  
Soumyananda Dinda
Keyword(s):  
Economic Growth ◽  
Dynamic Models ◽  
Composite Index ◽  
Principal Component ◽  
Transport Infrastructure ◽  
Positive Contribution ◽  
Model Framework ◽  
Vector Error Correction ◽  
Long Run ◽  
The Relationship

This study empirically re-examines the relationship between transport infrastructure and economic growth in India for the period 1990–2017. Multivariate dynamic models are applied to estimate the relationship between economic growth and different modes of transport infrastructure namely road, rail and air transports in the vector error correction model framework. The results reveal that road and air transports have significant positive contribution to economic growth in the long-run while rail transport is insignificant. This study further examines the said issue using unit free index variables and has constructed a composite index of transport infrastructure using principal component analysis to analyse the nexus between aggregate transport infrastructure and economic growth in India in the post globalisation era. The results of the study indicate the bidirectional causality between aggregate transport infrastructure and economic growth. Results of this study suggest incorporating feedback issue in policy formulations. JEL Codes: C22, O18, R4

The Role of Urbanisation in the Economic Development Process: Evidence from Nigeria

2017 ◽  
Vol 11 (3) ◽  
pp. 223-255 ◽  
Author(s):  
Sakiru Adebola Solarin
Keyword(s):  
Economic Growth ◽  
Least Squares ◽  
Error Correction ◽  
Industrial Development ◽  
Ordinary Least Squares ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Determinants Of Economic Growth ◽  
The Relationship

The aim of this article is to investigate the relationship between urbanisation and economic growth, while controlling for the agricultural sector, industrial development and government expenditure in Nigeria. The autoregressive distributed lag (ARDL) approach to cointegration is applied to examine the long-run relationship between the variables over the period 1961–2012. In the process of estimating the long-run coefficients, the ARDL method is augmented with a fully modified ordinary least squares (FMOLS) estimator and a dynamic ordinary least squares (DOLS) estimator. The direction of causality between the variables is examined through the vector error correction method (VECM) Granger causality test. The results establish the existence of a long-run relationship in the variables. The results of the long-run regressions indicate the presence of long-run causality from urbanisation, agriculture and industrialisation to economic growth. Due to the deficiencies associated with the single-equation methods (including the ARDL model), we also use the structural vector error correction model (SVECM) to analyse the relationship between the variables. The impulse response and variance decomposition analyses derived from the SVECM method suggest that urbanisation, agriculture and industrialisation are important determinants of economic growth. The implications of the results are discussed. JEL Classification: Q43, O55, O18

scholarly journals The Trade-Off Between Tourism and Pollution for Japanese Economic Growth

Tourism ◽  
2021 ◽  
Vol 69 (3) ◽  
pp. 381-394
Author(s):  
Giovanni Bella ◽  
Carla Massidda
Keyword(s):  
Economic Growth ◽  
Environmental Kuznets Curve ◽  
Kuznets Curve ◽  
Correction Model ◽  
Trade Off ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Polluting Emissions ◽  
The Relationship

This paper proposes a vector error correction model to investigate the relationship between polluting emissions and GDP levels in Japan, in the period 1970-2014, and tests the validity of the Environmental Kuznets Curve (EKC) hypothesis driven by tourist arrivals. Our results validate the existence of two different causality channels among the selected variables. In particular, we find that a trade-off might exist between increasing the number of tourists, which drives economic growth, and the pattern of a sustainable development, due to the increase of polluting emissions. The analysis allows us to propose appropriate policy strategies to promote a robust and sustainable long run economic growth.

scholarly journals Does Uncertainty Matter for Trade - Economic Growth Nexus in Indonesia?

2021 ◽  
Vol 67 (1) ◽  
pp. 147
Author(s):  
Panky Tri Febiyansah ◽  
Bintang Dwitya Cahyono ◽  
Rio Novandra
Keyword(s):  
Economic Growth ◽  
Causal Relationship ◽  
Output Growth ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
The Impact ◽  
The Relationship

This paper aims to test the impact of uncertainty on the causal relationship among exports, imports, and economic growth in Indonesia. The relationship is constructed by examining the presence of FDI-adjusted exports and imports (trade) and the output link using conditional variances-covariances derived from the generalized autoregressive conditional heteroskedastic (GARCH) process in a vector error correction model (VEC-GARCH model). Using evidence in Indonesia, the model exposes the uni-directional nexus from trade performance to trade-adjusted output growth in the absence of uncertainty. The volatility effects are evident in the causal relationship between trade and output. The finding shows that the uncertainty effects hamper the trade-economic growth nexus. Incorporated with the long-run causality, trade still causes output even after containing the contributions of volatility. The significant role of imports highlights the higher demand for intermediate capital products and the inclusion of technology in strengthening economic growth.

The Economic and Environmental Impact of Large Financial Developments in an Oil-Dependent Economy

2020 ◽  
pp. 221-240
Author(s):  
Hanan Naser
Keyword(s):  
Economic Growth ◽  
Environmental Impact ◽  
Vector Error Correction Model ◽  
Policy Makers ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Market Shares ◽  
Short Run ◽  
The Relationship

This study examines the economic and environmental impact of large financial developments in Bahrain from year 2006 to 2016. To do so, the relationship between energy consumption, oil prices, market shares, dividend yields, and economic growth has been investigated using Vector Error Correction Model (VECM). The key findings are summarized as follow: (1) Long run relationship exists between the suggested variables. (2) Both energy and financial markets are significant in the long run relationship, and positively affect the economic growth of Bahrain. (3) According to the estimated ECM term, the model is stable in the short run. (4) Decline in oil price has negative significant drawback on the economic growth of Bahrain. Accordingly, it is recommended that policy makers in Bahrain focuses on implement strong strategies that aim at encouraging investments in non-oil sectors without impeding energy sector or economic growth in order to move towards sustainability.

Transport Infrastructure and Economic Growth: New Evidence from Tunisia an ARDL Bounds Testing Approach

2017 ◽  
Vol 9 (2) ◽  
pp. 98-112
Author(s):  
Radhia Amairia ◽  
Bouzid Amaira
Keyword(s):  
Economic Growth ◽  
Jel Classification ◽  
Transport Infrastructure ◽  
Annual Data ◽  
Positive Contribution ◽  
Bounds Testing ◽  
Distributed Lag ◽  
Distributed Lag Model ◽  
Long Run ◽  
Lag Model

The achievement of an effective infrastructure, reliable and fair, is essential for economic growth. Indeed, the transport infrastructure is essential to the prosperity of regions. To investigate the relationship between transport infrastructure and economic growth, we use the autoregressive distributed lag model (ARDL), we find that transport infrastructure is cointegrated with economic performance, indicating the affirmed presence of long-run equilibrium relationships among them. We use annual data for the period from 1980 to 2013. The study found that the transport infrastructure and investment in transport infrastructure in Tunisia have a significant positive contribution to growth, which shows that each impact is strong and statistically significant. The Tunisian experience suggests that it is necessary to design an economic policy that will improve the transport infrastructure and to increase investment made to the sector for sustainable economic growth in Tunisia. It is necessary to improve the existing road and rail networks. JEL Classification: F63, L91, R41

scholarly journals Long-run equilibrium between personal income tax and economic growth in Bulgaria

2021 ◽  
Vol 7 (1) ◽  
pp. 55-67
Author(s):  
S. Tanchev ◽  
Keyword(s):  
Economic Growth ◽  
Income Tax ◽  
Personal Income ◽  
Tax Revenue ◽  
Personal Income Tax ◽  
Vector Error Correction ◽  
Long Run ◽  
Short Run ◽  
The Relationship ◽  
Long Run Equilibrium

The study analyzes the relationship of personal income tax and economic growth in the long and short runs to show which type of income tax (progressive or proportional) is more compatible with Bulgaria’s economic growth. The methods of Vector Error Correction and Correlation are applied to determine the long-run and short-run impacts of the two types of income tax. The research covers the period from the first quarter of 1999 to the first quarter of 2020. Eurostat data (85 observations) were used. The empirical research has been divided into two periods. The long-run and short-run relationships between economic growth and tax revenue from progressive income tax in Bulgaria have first been studied, followed by the relationship between economic growth and the tax revenue from proportional income tax. The research results show that there is a long-run equilibrium relationship, but not a short-run relationship, between personal income tax and economic growth. The results imply that the progressive income tax is more compatible with economic growth than proportional income tax in Bulgaria in the long run. In the short run, the progressive income tax and proportional income tax have not shown statistically significant relationships with economic growth. Therefore, a progressive income tax leads to greater economic growth than a proportional income tax. From a long-run equilibrium standpoint, it is advisable that Bulgaria switch from proportional to progressive income taxation. It may be inferred that progressive taxation is more appropriate for economic growth than proportional taxation. The results are in conformity with the theory of endogenic growth and reject the neoclassical theory.

scholarly journals The Relationship between Coal Consumption and Economic Growth in Indonesia

2018 ◽  
Vol 2 (1) ◽  
pp. 12
Author(s):  
Irwandi Irwandi
Keyword(s):  
Economic Growth ◽  
Control Variable ◽  
Coal Consumption ◽  
Causality Test ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Export Tax ◽  
The Relationship

Indonesia is one of the largest coal producer countries in the world. In the previous research, it is stated that coal producer countries are able to affect economic growth. The purpose of the study is to investigate the co-integration and causal relationships between coal consumption and income in Indonesia for the period of 1965-2016 using Granger causality test based on Vector Error Correction Model (VECM) employing population as the control variable in bivariate system. The Augmented Dicky-Fuller (ADF) and Phillips-Perron (PP) tests were used to determine the variable stationarity. From Johansen’s co-integration tests, it is indicated that there is a long-run relationship between the variables. The empirical study shows that there is no causal relationship between coal consumption and economic growth in Indonesia since coal consumption in fact cannot affect economic growth in Indonesia. Export tax becomes government revenues earned from energy sectors including coal.

scholarly journals Re-examining the impact of financial intermediation on economic growth: evidence from Turkey

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ibrahim Nandom Yakubu ◽  
Aziza Hashi Abokor ◽  
Iklim Gedik Balay
Keyword(s):  
Economic Growth ◽  
Financial Intermediation ◽  
Composite Index ◽  
Principal Component ◽  
Annual Data ◽  
Bounds Testing ◽  
Content Type ◽  
Long Run ◽  
Short Run ◽  
The Impact

PurposeThis study seeks to investigate the impact of financial intermediation on economic growth in Turkey using annual data spanning 1970–2017.Design/methodology/approachBased on the results of the augmented Dickey–Fuller and Phillips–Perron unit root tests for stationarity, the authors employ the Autoregressive Distributed Lag (ARDL) bounds testing to cointegration to establish the long-run impact of financial intermediation alongside other control factors on economic growth. The study also examines the short-run relationship between financial intermediation and economic growth by estimating the Error Correction Model (ECM).FindingsThe authors’ findings indicate that financial intermediation significantly influences economic growth in both short and long run. However, the effect is positive only in the short run, lending support to the supply-leading hypothesis. Regarding the control variables, the authors observe that while financial openness shows a positive significant impact on economic growth in the long run, gross fixed capital formation matters only in the short run. The results further infer that regardless of the time period, inflation impedes economic growth.Originality/valueIn the empirical analysis of the relationship between financial intermediation and economic growth, financial intermediation is always measured using a single variable. The authors argue that such studies could produce bias and misleading results given that a single proxy does not adequately reflect financial intermediation activities. Likewise, such findings may delude policy implementation. To provide a more vivid and robust analysis, the authors employ the Principal Component Analysis (PCA) to construct a composite index for financial intermediation based on three broad measures. The researchers’ are unaware of any study on the financial intermediation–economic growth nexus using a composite index of financial intermediation. Thus, this paper fills this lacuna in the literature.

scholarly journals Agricultural Output and Economic Growth Nexus in Ghana

2021 ◽  
Vol 4 (1) ◽  
Author(s):  
T. Mohammed ◽  
T Damba ◽  
J. Amikuzuno
Keyword(s):  
Economic Growth ◽  
Value Added ◽  
Causality Test ◽  
Agricultural Output ◽  
Vector Error Correction ◽  
Agriculture Sector ◽  
Vector Error ◽  
Long Run ◽  
Integration Test ◽  
The Relationship

This study explored the relationship between agricultural output and economic growth in Ghana from 1960 to 2016 using monthly data on the Gross Domestic Product (GDP), Gross Capital Formation (GCF), agriculture and inflation. Despite several agriculture-led economic growth programmes that have been implemented by successive governments, including the very recent “Planting for Food and Jobs” to create jobs and boost economic growth, the contribution of agriculture sector output to the Ghanaian economy has been on the decline. The estimation results from the Johansen Maximum Likelihood co-integration and the Vector Error Correction Model (VECM) support evidence of a long-run relationship between agricultural output and economic growth in Ghana. Specifically, the co-integration test reveals that agricultural output and economic growth were found to be moving together in the long run. The Granger causality test showed a unidirectional causal relationship running from agricultural value-added to economic growth but no causal flow from general economic growth to agriculture. This indicates that agriculture is still an engine of economic growth in Ghana and hence requires pro-poor policies to address the numerous challenges.

scholarly journals The Relationship between Coal Consumption and Economic Growth in Indonesia

2018 ◽  
Vol 2 (1) ◽  
pp. 13
Author(s):  
Irwandi Irwandi
Keyword(s):  
Economic Growth ◽  
Control Variable ◽  
Coal Consumption ◽  
Causality Test ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Export Tax ◽  
The Relationship

Indonesia is one of the largest coal producer countries in the world. In the previous research, it is stated that coal producer countries are able to affect economic growth. The purpose of the study is to investigate the co-integration and causal relationships between coal consumption and income in Indonesia for the period of 1965-2016 using Granger causality test based on Vector Error Correction Model (VECM) employing population as the control variable in bivariate system. The Augmented Dicky-Fuller (ADF) and Phillips-Perron (PP) tests were used to determine the variable stationarity. From Johansen’s co-integration tests, it is indicated that there is a long-run relationship between the variables. The empirical study shows that there is no causal relationship between coal consumption and economic growth in Indonesia since coal consumption in fact cannot affect economic growth in Indonesia. Export tax becomes government revenues earned from energy sectors including coal.

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