Application of Bootstrap Simulation and Asymmetric Causal Approach to Fiscal Deficit-Inflation Nexus

2020 ◽  
Vol 12 (2) ◽  
pp. 123-140
Author(s):  
Clement Olalekan Olaniyi
Keyword(s):  
Jel Classification ◽  
Fiscal Deficit ◽  
Frequency Data ◽  
Output Level ◽  
Fiscal Deficits ◽  
Bootstrap Simulation ◽  
Inflation Rates ◽  
Causal Approach ◽  
Asymmetric Causality ◽  
Double Digit

This paper investigates the symmetric and asymmetric relationship between fiscal deficits and inflation in Nigeria within the context of bootstrap simulations with leverage adjustments using the quarterly frequency data from 1981Q1 to 2016Q4. The findings reveal that there is neither symmetric nor asymmetric causality between fiscal deficits and inflation in Nigeria. This implies that the fiscal deficits in Nigeria are not inflationary; and also, that persistent double-digit inflation rates are not the causal agents spurring perennial increase in fiscal deficits in Nigeria. This study, therefore, concludes that fiscal deficits could be used to stimulate output level in Nigeria without fueling inflationary spiral in the economy. JEL Classification: C32, E17

scholarly journals Fiscal Deficit of Rajasthan: Trends, Cycles and Seasonal

2020 ◽  
Vol 5 (9) ◽  
pp. 366-377
Author(s):  
Dr. Debesh Bhowmik
Keyword(s):  
Domestic Product ◽  
Forecasting Model ◽  
Seasonal Patterns ◽  
Fiscal Deficit ◽  
Seasonal Fluctuations ◽  
Fiscal Deficits ◽  
Filter Model ◽  
Forecast Models ◽  
Cyclical Trend

The paper has explored the smooth cyclical trend,cycles and seasonal patterns of fiscal deficit in gross and in per cent of net state domestic product of Rajasthan in current prices during 1990-91-2018-19 by applying Hamilton regression filter model(2018) which was also passed through ARIMA(p,d,q) forecasting model for 2030 and was also verified by heteroscedasticity test.Both the fiscal deficits in gross and in per cent of NSDP showed many peaks and troughs in cyclical patterns but only one peak and trough were found in the smooth cyclical trends and the inverse v shaped seasonal fluctuations were visible with no heteroscedasticity problems.Their ARIMA forecast models for 2030 are convergent,significant and move towards equilibrium.

scholarly journals Fiscal Deficits and Debt Dimensions of Pakistan

1999 ◽  
Vol 38 (4II) ◽  
pp. 1067-1080
Author(s):  
Muhammad Ishfaq ◽  
M. A. Chaudhary
Keyword(s):  
Fiscal Deficit ◽  
Complete Elimination ◽  
Fiscal Deficits ◽  
Cause And Effect ◽  
Short Run ◽  
External Sources

Pakistan continues to suffer from a syndrome of high fiscal deficits and severe incidence of debt. Its annual fiscal deficit has stayed constantly at over 6 percent of GDP especially since 1990 [Pakistan (1997-98)]. The prevalence of such a high fiscal deficit over the years in a row has propelled increased borrowing from both internal and external sources to cover the resource gap. With inadequate improvement in the repayment capacity of the country debt has continued to accumulate at a massive rate. Serving as the cause and effect of each other, the volumes of both the fiscal deficit and debt have soared continuously. The most devastating consequence of high fiscal deficit and soaring debt has been the continuous accrual of massive debt-servicing. In fact, both the debt and debt-servicing have reached unaffordable limits. How to alleviate this situation has become the foremost issue of the country. While complete elimination of all the debt and thereby debt-servicing may not be easy to accomplish in the short run, efforts are needed to systematically bring the fiscal deficit down to a minimum affordable limit. What may be the minimum financeable level of fiscal deficit and how it may be reduced to that level are the issues addressed in this paper.

scholarly journals The influence of indirect monetary tools on price and output: the case of Jordan (1993-2013)

2017 ◽  
Vol 12 (1) ◽  
pp. 8-13
Author(s):  
Usama R. Alqalawi ◽  
Hail A. Jemel ◽  
Ahmad A. Alwaked ◽  
Rasha M.S. Istaiteyeh
Keyword(s):  
Monetary Policy ◽  
Money Supply ◽  
Time Series Data ◽  
Jel Classification ◽  
Series Data ◽  
Policy Tools ◽  
Open Market ◽  
Output Level ◽  
Repurchase Agreements ◽  
The Impact

This research aims to identify the main monetary policy tools in Jordan, then, to estimate their effect on price and output level. A time series data covering the period between 1993 and 2013 were utilized to estimate the targeted models using two-step regression. Firstly, the authors measured the impact of indirect policy tools on money supply and, secondly, they determined the impact of money supply on price and output levels. Results show that open market operations of the Central Bank of Jordan through issuance of certificates of deposit, especially at the beginning of 1993 and the repurchase agreements have been effective in influencing the money supply in Jordan. Unfortunately, this policy was not able to control the real or nominal output level even though it has an effect on the price level. Keywords: monetary policy, open market operations, required reserve ratio, discount rate, price and output. JEL Classification: E31, E42, E52, E58

Ghana's budget proposals likely to prove unfeasible

2017 ◽  
Keyword(s):  
Government Spending ◽  
Foreign Debt ◽  
Fiscal Deficit ◽  
Content Type ◽  
Small Impact ◽  
The Government ◽  
Oil Revenues ◽  
Expected Increase ◽  
Double Digit

Significance The government plans to increase government spending to 58.1 billion cedis (12.5 billion dollars), up 13.7% from 2016, while reducing the fiscal deficit to 6.5% of GDP from 8.7% last year. The government has assured supporters it will keep campaign promises to cut taxes and increase infrastructure spending, despite the larger-than-expected fiscal hole in government accounts. Impacts Increased oil revenues will have a relatively small impact on government finances, despite the almost 40% expected increase in output. The government will likely renege on several election promises after admitting that it cannot deliver double-digit growth this year. Plans to pay down foreign debt this year may be unachievable given overly ambitious revenue targets.

scholarly journals Disinvestment of Public Sector Enterprises (PSEs) and Fiscal Deficit Tackling in India

2020 ◽  
Vol 9 (2) ◽  
pp. 11-17
Author(s):  
K. A. Aneesh
Keyword(s):  
Public Sector ◽  
Life Insurance ◽  
Central Government ◽  
Lower Price ◽  
Fiscal Deficit ◽  
Economic Policies ◽  
Fiscal Deficits ◽  
The Government

Every year since 1991, the Central Government of India has been successfully disinvesting its PSEs from various sectors. The recent announcement to strategically disinvest some of the better performing PSEs like Life Insurance Corporation of India Ltd., Air India and so on is indeed shocking. This seriously questions the intension of the government towards the declared objectives of the disinvestment strategy in 1991. There are severe apprehensions on selling-off the PSEs at a lower price and the utilization of disinvestment proceeds for filling the revenue deficits of the Central Government. This paper discusses the idea of disinvestment in India and the debates associated with it. The paper also critically analyses the disinvestment proceeds in India as a tool to tackle mounting fiscal deficits after the initiation of the New Economic Policies in 1991.

scholarly journals Are Fiscal Deficits Inflationary in Nigeria? Evidence From Cointegration With Structural Breaks

2020 ◽  
Author(s):  
Ismail Fasanya ◽  
Ayinke Fajobi ◽  
Abiodun Adetokunbo
Keyword(s):  
Structural Breaks ◽  
Structural Changes ◽  
Annual Data ◽  
Fiscal Deficit ◽  
Fiscal Deficits ◽  
Macroeconomic Factors ◽  
Fiscal Management ◽  
Ardl Approach ◽  
The Relationship ◽  
Better Than

Abstract In this paper, we model the relationship between fiscal deficit and inflation for Nigeria using annual data from 1980 to 2019. We employ the Linear ARDL approach and also account for structural breaks using the Bai and Perron (2003) test that allows for multiple structural changes in regression models.The paper finds that fiscal deficit is a major determinant of inflation along with other macroeconomic factors considered in the study. However, we observe that it may be necessary to pre-test for structural breaks when modelling the relationship between fiscal deficit and price level as it performs better than when structural events are not considered.The results imply that a fiscal management process that does not encourage increased revenue and reduce fiscal deficits in Nigeria will further worsen the level of inflation in the country.

scholarly journals Are fiscal deficits inflationary in Nigeria? New evidence from bounds testing to cointegration with structural breaks

2021 ◽  
Vol 66 (228) ◽  
pp. 123-147
Author(s):  
Ismail Fasanya ◽  
Ayinke Fajobi ◽  
Abiodun Adetokunbo
Keyword(s):  
Structural Breaks ◽  
Structural Changes ◽  
Annual Data ◽  
Fiscal Deficit ◽  
Bounds Testing ◽  
Fiscal Deficits ◽  
Macroeconomic Factors ◽  
Fiscal Management ◽  
Ardl Approach ◽  
The Relationship

In this paper, we model the relationship between fiscal deficit and inflation for Nigeria using annual data from 1980 to 2016. We employ the linear ARDL approach and account for structural breaks using the Bai and Perron (2003) test that allows for multiple structural changes in regression models. The paper finds that the fiscal deficit is a major determinant of inflation along with other macroeconomic factors considered in the study. However, we observe that it may be necessary to pretest for structural breaks when modelling the relationship between the fiscal deficit and the price level, as it performs better than when structural events are not considered. The results imply that a fiscal management process that does not encourage increased revenue and reduce fiscal deficits will further worsen the level of inflation in the country.

Revisiting the Sustainability of India’s Fiscal Deficit

2021 ◽  
pp. 001946622110066
Author(s):  
Manisha Devi ◽  
Amiya Sarma
Keyword(s):  
Public Debt ◽  
Jel Classification ◽  
Annual Data ◽  
Data Sets ◽  
Fiscal Deficit ◽  
Fiscal Policies ◽  
Time Period ◽  
Sustainability Issue ◽  
Fiscal Reaction Function ◽  
The Government

Growing fiscal deficit and public debt has been a cause of concern for the government, economists and the policymakers of India since long. Various studies have tried to test the sustainability issue of India’s fiscal policies applying various methodologies time to time. However, the results obtained are ambiguous. Such ambiguity might emerge because of the various methodologies adopted for the respective studies. In view of this, the current study attempts to revisit the sustainability issue of India’s fiscal deficit using up-to-date time series methodologies on the annual data sets ranging from the time period 1981 to 2019. Apart from this, the study also tries to verify the results using a model based on fiscal reaction function (FRF) developed by Henning Bohn. The study found the fiscal deficit of India to be sustainable. JEL Classification: H61, H62, H63, H68

scholarly journals Determinants of High and Continuous Inflation Rates in the United Arab Emirates: A Managerial Point of View

2016 ◽  
Vol 7 (2) ◽  
pp. 68
Author(s):  
Mahmoud Kamal Abouraia
Keyword(s):  
United Arab Emirates ◽  
Management Strategies ◽  
Developed Countries ◽  
Point Of View ◽  
Way Of Life ◽  
Inflationary Pressure ◽  
Inflation Rates ◽  
The Subject ◽  
The Impact ◽  
Double Digit

Inflation has become serious and argumentative problems for most developed countries. The impact of these concerns derived from various sources, each of which may bring about diverse effects on economic activity in general. Among different countries, United Arab Emirates as one of oil-dependent country has an extremely particular involvement as far as inflation. Economy of UAE has experienced occasions of high (2006-2008) and low (2010-2011) regimes of double digit inflation for more than decades. With the price precariousness, a consistent and tenacious increment has been found to influence financial development, way of life similarly the value of the currency, which thusly impacts the country’s conversion standard. The purpose of this paper endeavors to clarify the determinants that subsidize extensively to inflation in the UAE. The methodology utilized as a part of this examination depends on interpretive strategy which derived from perception and through evaluation of literatures relating to the subject matter. The investigation was finished by analyzing, examining and selecting of data systematically and objectively in order to gather collated information. The findings uncovered inflationary pressure influences UAE organizations is through the principle parts of consumer price data. In addition, this paper additionally expected to have a wide understanding to the implementation of management strategies, including contractionary fiscal and monetary approaches to diminish the money supply and ultimately the spending in the country.

The Political Economy of Fiscal Deficit Reductions

2020 ◽  
pp. 83-91
Author(s):  
Vito Tanzi
Keyword(s):  
Political Economy ◽  
Public Debt ◽  
Real Life ◽  
Policy Instruments ◽  
The Political ◽  
Principal Agent ◽  
Fiscal Deficit ◽  
Fiscal Deficits ◽  
The Past

Do policymakers learn from the past mistakes of previous governments or from mistakes made by other countries? Probably not. They mostly learn from their own mistakes. Governments often end up with fiscal deficits and a public debt that are too large. They regularly make pronouncements that they find difficult to satisfy, thus losing credibility. The loss of that credibility makes it difficult for them to introduce the necessary policies. The chapter provides some real life examples. Governments’ control over policymaking is often limited, as is their control over policy instruments. This is an area where principal–agent problems frequently exist.

Sign in / Sign up

Export Citation Format

Share Document