scholarly journals The Infrastructure–Growth Nexus in Nigeria: A Reassessment

2019 ◽  
Vol 11 (1-2) ◽  
pp. 41-58
Author(s):  
Godday Uwawunkonye Ebuh ◽  
Ifeoma Betty Ezike ◽  
Tersoo Shimonkabir Shitile ◽  
Ebow Suleiman Smith ◽  
Timipre Mary Haruna
Keyword(s):  
Policy Formulation ◽  
Jel Classification ◽  
Output Growth ◽  
Infrastructure Development ◽  
Real Economy ◽  
Causality Test ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Financial Infrastructure

This article re-examines the link between infrastructure development and output growth in Nigeria for policy formulation and implementation. The article employed the Granger causality test based on the time series vector error correction model (VECM) to reinvestigate the nexus between infrastructure investment and economic growth in Nigeria, using quarterly data from 1997:Q1 to 2017:Q4. This study, therefore, interrogates and accepts the infrastructure–growth hypothesis that increased financial infrastructure and infrastructure stock stimulates long-run real economy expansion in the Nigerian context. JEL Classification: H54, E23, C23

The Effect of Real Exchange Rate on Trade Balance in a Resource-Rich Economy: The Case of Mongolia

2018 ◽  
Vol 53 (4) ◽  
pp. 211-224 ◽  
Author(s):  
Gan-Ochir Doojav
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Trade Balance ◽  
Developing Economies ◽  
Jel Classification ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Short Run ◽  
Exchange Rate Depreciation

For resource-rich developing economies, the effect of real exchange rate depreciation on trade balance may differ from the standard findings depending on country specific characteristics. This article employs vector error correction model to examine the effect of real exchange rate on trade balance in Mongolia, a resource-rich developing country. Empirical results show that exchange rate depreciation improves trade balance in both short and long run. In particular, the well-known Marshall–Lerner condition holds in the long run; however, there is no evidence of the classic J-curve effects in the short run. The results suggest that the exchange rate flexibility may help to deal effectively with current account deficits and exchange rate risk. JEL Classification: C32, C51, F14, F32

scholarly journals The Relationship between Household Debt and Consumption Spending in South Africa

2017 ◽  
Vol 9 (2) ◽  
pp. 243
Author(s):  
Patience Nkala ◽  
Asrat Tsegaye
Keyword(s):  
South Africa ◽  
Well Being ◽  
Household Debt ◽  
Causality Test ◽  
Policy Makers ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Short Run ◽  
The Relationship

Consumption has been and remains the main contributor to gross domestic product (GDP) growth in South Africa. Household debt on the other side has remained high over the years. These two economic indicators are a reflection of the well-being of an economy. This study thus examined the relationship between household debt and consumption spending, for the period between 1994 and 2013. The Johansen cointegration technique and the Vector error correction model (VECM) were utilised to test the long run and short run relationships between the variables. The Granger causality test was also employed to test the direction of causality between the variables. Results from this study have revealed that a relationship exists between household debt and consumption spending in South Africa and they have also showed that this relationship flows from household debt to consumption spending. The implications of these results are that consumption spending may be increased through other measures rather than through increasing debt. The study therefore recommends that policy makers avail more investment opportunities for households and to also create employment in a bid to increase the income of households which can then be used to increase household consumption rather than the use of debt.

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 CAUSAL RELATIONSHIP BETWEEN INSURANCE AND ECONOMIC GROWTH IN NIGERIA (1986-2010)

2012 ◽  
Vol 02 (12) ◽  
pp. 49-57
Author(s):  
TAIWO AKINLO
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Causal Relationship ◽  
Causality Test ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Short Run

This study examined the causal relationship between insurance and economic growth in Nigeria over the period 1986-2010. The Vector Error Correction model (VECM) was adopted. The cointegration test shows that GDP, premium, inflation and interest rate are cointegrated when GDP is the edogeneous variable. The granger causality test reveals that there is no causality between economic growth and premium in short run while premum, inflation and interest rate Granger cause GDP in the long run which means there is unidirectional causality running from premium, inflation and interest rate to GDP. This means insurance contributes to economic growth in Nigeria as they provide the necessary long-term fund for investment and absolving risks.

scholarly journals Empirical Evidence of a Long-Run Relationship Between Agriculture and Manufacturing Industry Output in Nigeria

SAGE Open ◽  
2020 ◽  
Vol 10 (1) ◽  
pp. 215824401989904
Author(s):  
Eze Simpson Osuagwu
Keyword(s):  
Manufacturing Industry ◽  
Agricultural Productivity ◽  
Granger Causality Test ◽  
Vector Error Correction Model ◽  
Causality Test ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Industry Output

This study investigates a long-run relationship between agriculture and manufacturing industry output in Nigeria using annual time series data from 1982 to 2017. The study employs Granger causality test, vector error correction model, and co-integration techniques to estimate the interdependence between agricultural productivity and manufacturing industry output. Empirical evidence from Granger causality test reveals a bidirectional relationship between agricultural productivity and manufacturing industry output. Although a positive and significant relationship exists in the short- and long-run estimates, a long-run divergence from the vector error correction model indicates that changes in agricultural productivity are not restored to equilibrium, given that macroeconomic factors distort the linkage. Policy implications suggest that macroeconomic stability is a necessary condition for agriculture and manufacturing industry output to foster economic growth.

Assessing Financial Integration of BRICS Equity Markets: An Empirical Analysis

2017 ◽  
Vol 3 (2) ◽  
pp. 127-138 ◽  
Author(s):  
J. Vineesh Prakash ◽  
D. K. Nauriyal ◽  
Sandeep Kaur
Keyword(s):  
South Africa ◽  
Granger Causality ◽  
Financial Integration ◽  
Equity Markets ◽  
Granger Causality Test ◽  
Causality Test ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Johansen Cointegration Test

This article examines the degree of financial integration among the equity markets of Brazil, Russia, India, China, and South Africa (BRICS) by using monthly data collected for the period 2005–2014. The study employs Johansen cointegration test, vector error correction model (VECM), and Granger causality test which confirm the existence of relationship in the short and long run among the equity markets of BRICS. Further results exhibit that there exists cointegration or a long-run relationship among the equity markets, but weak cointegration, though the results of Granger causality test do not display existence of any causality among market pairs such as China–Brazil, Russia–Brazil, South Africa–Brazil, Russia–China, and South Africa–India. The results indicate that even though the financial integration among the equity markets of BRICS is on ascendance, it is yet incomplete. This work suggests harmonization of laws, regulations, and operations based on international principles and appropriate regulatory supervision among BRICS nations in order to minimize the risk of financial integration, besides further relaxing restrictions on capital account for expedited financial integration.

scholarly journals Monetary Policy and Long Run Economic Growth in Nigeria: An Application of the Vector Error Correction Mechanism

2021 ◽  
Vol 2 (2) ◽  
pp. 71-83
Author(s):  
Vincent Iorja GISAOR
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Error Correction ◽  
Money Supply ◽  
Granger Causality Test ◽  
Causality Test ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Error Correction Mechanism

The inability of most developing economies to use monetary policy to engender real economic growth in their countries prompted the researchers to empirically assess the impact of monetary policy on economic growth in Nigeria between 1980 and 2014. The study employed an econometrics approach making use of the ADF unit root test, Johansen cointegration, Vector error correction model, Pairwise granger causality test and variance decomposition. The Vector Error Correction Mechanism result shows a positive short and long run relationship between both narrow money supply and broad money supply and economic growth in Nigeria with model strength of 75%. The Pairwise granger causality test shows a bi-directional causality between broad money supply and economic growth in Nigeria and was statistically significant at 5% level of confidence. Recommendations were for the government to use her contractionary monetary efforts and implement relevant policies to curtail the inverse effect of the persistent variation in the value of exchange rate, price level and interest rate in Nigeria and adequate regulation of the quantity of money in circulation to avoid hyperinflation and other unpredictable monetary volatilities.

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 REVISITING KEYNES’ INVESTMENT AND SAVING MODEL IN INDONESIA

2020 ◽  
Vol XVIII (2) ◽  
pp. 45-58
Keyword(s):  
Error Correction ◽  
Causal Relationship ◽  
Granger Causality Test ◽  
Vector Error Correction Model ◽  
Causality Test ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Short Run

This study aims to analyze the Keynes’ investment and saving model in Indonesia from 1981 to 2018. The researchers use the econometric test from the Granger causality test to find the short-run causal relationship and the Vector Error Correction Model to reveal both the short-run and long-run effects in the model. The result of Granger causality test demonstrates that there is no short-run causal relationship between these two variables. In the short-run, the increase in saving affects the consumption loans more compared to the investment loans. Besides, increased consumption compared to saving has more influence in raising investment. However, the Vector Error Correction Model proves that saving negatively affects investment in the long-run. This model empirically supports the long-run Keynes’ investment and saving model. Consequently, the Indonesian government needs to consider saving as a policy instrument to increase investment in the longrun.

scholarly journals Threshold Cointegration and Nonlinear Causality test between Inflation Rate and Repo Rate

2017 ◽  
Vol 9 (3(J)) ◽  
pp. 163-170
Author(s):  
Katleho Makatjane ◽  
Ntebogang Moroke ◽  
Diteboho Xaba
Keyword(s):  
South Africa ◽  
Inflation Rate ◽  
Test Statistic ◽  
Causality Test ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Inflation Rates ◽  
Target Period ◽  
Repo Rate

The current study investigated a cointegration and nonlinear causality relationships between inflation and repo rates of South Africa using the data spanning the period of January 2002 to March 2016. We used a threshold vector error correction model (TVECM) and nonlinear Granger frameworks causality to carry out the analysis. Preliminary analysis of data revealed the expected properties of the data such as nonlinearity, non-stationarity and co-movement of the variables. The two variables confirmed to be moving together in the long-run according to the observed supWald test statistic. Finally, the Diks-Panchenko nonlinear Causality test revealed a strong bidirectional nonlinear causal relationship between repo rate and inflation rate. The results imply that the use of repo rate to target the inflation rate during the target period did not address the financial problem in South Africa. Consequently, the study concluded that repo rate may not be a good measure to use for controlling inflation rates of South Africa.

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