Effects of Government Expenditure on Private Investment in Nigerian Economy (1980–2016)

2018 ◽  
Vol 4 (2) ◽  
pp. 147-156
Author(s):  
Taiwo Akinlo ◽  
Olusola Joel Oyeleke
Keyword(s):  
Interest Rate ◽  
Positive Impact ◽  
Government Expenditure ◽  
Private Investment ◽  
Correction Model ◽  
Long Run ◽  
Short Run ◽  
The Government ◽  
The Interest Rate ◽  
The Relationship

This study examined the effect of government expenditure on private investment in Nigeria during the period 1980–2016. The error correction model analysis was used in the study to analyze the relationship between the two variables. The study found that there is a long-run relationship among the variables and that the interest rate and inflation have negative but significant impact on private investment in the long run. On the other hand, government expenditure has positive but insignificant impact on private investment in the long run. In the short run, government expenditure and interest rate have a significant positive impact on private investment in Nigeria, while GDP per capita and inflation negatively impact private investment. The study concluded that there is the need for the government to increase its expenditure particularly on the provision of more infrastructural facilities as this will attract more investment from within and outside the country.

scholarly journals Investigating the Causal Linkages among Inflation, Interest Rate, and Economic Growth in Pakistan under the Influence of COVID-19 Pandemic: A Wavelet Transformation Approach

2021 ◽  
Vol 14 (6) ◽  
pp. 277
Author(s):  
Muhammad Azmat Hayat ◽  
Huma Ghulam ◽  
Maryam Batool ◽  
Muhammad Zahid Naeem ◽  
Abdullah Ejaz ◽  
...  
Keyword(s):  
Interest Rate ◽  
Granger Causality ◽  
Wavelet Transformation ◽  
Multi Scale ◽  
Long Run ◽  
Causality Tests ◽  
Short Run ◽  
The Interest Rate ◽  
The Relationship ◽  
Cross Wavelet

This research is the earliest attempt to understand the impact of inflation and the interest rate on output growth in the context of Pakistan using the wavelet transformation approach. For this study, we used monthly data on inflation, the interest rate, and industrial production from January 1991 to May 2020. The COVID-19 pandemic has affected economies around the world, especially in view of the measures taken by governmental authorities regarding enforced lockdowns and social distancing. Traditional studies empirically explored the relationship between these important macroeconomic variables only for the short run and long run. Firstly, we employed the autoregressive distributed lag (ARDL) cointegration test and two causality tests (Granger causality and Toda–Yamamoto) to check the cointegration properties and causal relationship among these variables, respectively. After confirming the long-run causality from the ARDL bound test, we decomposed the time series of growth, inflation, and the interest rate into different time scales using wavelet analysis which allows us to study the relationship among variables for the very short run, medium run, long run, and very long run. The continuous wavelet transform (CWT), the cross-wavelet transform (XWT), cross-wavelet coherence (WTC), and multi-scale Granger causality tests were used to investigate the co-movement and nature of the causality between inflation and growth and the interest rate and growth. The results of the wavelet and multi-scale Granger causality tests show that the causal relationship between these variables is not the same across all time horizons; rather, it is unidirectional in the short-run and medium-run but bi-directional in the long-run. Therefore, this study suggests that the central bank should try to maintain inflation and the interest rate at a low level in the short run and medium run instead of putting too much pressure on these variables in the long-run.

scholarly journals Tax Revenue and Government Expenditure in Sri Lanka: An Econometric AEG Testing Approach

2016 ◽  
Vol 66 ◽  
pp. 31-37 ◽  
Author(s):  
A.L.M. Aslam
Keyword(s):  
Sri Lanka ◽  
Government Expenditure ◽  
Tax Revenue ◽  
Long Run ◽  
Short Run ◽  
Independent Variable ◽  
The Government ◽  
Relationship Of ◽  
The Relationship ◽  
Cointegration Relationship

In the global economic administration, tax revenue has been identified as the engine of the government expenditure, but the relationship of them was not investigated econometrically, this situation formulated a research gap for tasting the relationship of them. The aim of this study was to examine the Cointegration relationship among the tax revenue and the government expenditure in Sri Lanka. This study considered two time series variables such as the tax revenue and the government expenditure. The tax revenue was considered as the independent variable and the government expenditure was considered as the dependent variable. The sample period of this study was from 1950 to 2013.The Cointegration technique was used to check the long run relationship and the Error Correction Mechanism was employed to investigate the short run behavior of the tax revenue on the government expenditure. According to the empirical results, the R-squared of the estimated model was 0.99. In the meantime, the Durbin Watson statistics was 0.828. However, this model did not suffer from the spurious problem because the residual of this model was stationary. The tax revenue has sustained positive relationship with government expenditure. And also, the partial coefficients of tax revenue and its probability values in the estimated model were 0.695 (0.000) in short run and 1.031 (0.000) in long run periods. Therefore, the tax revenue and government expenditure had cointegrated at level form I(0) and maintained the long and short run relationship between them.

scholarly journals Empirical Analysis of Fiscal Sustainability and Optimal Level of Debt in Pakistan

2020 ◽  
Vol 7 (4) ◽  
pp. 282-292
Author(s):  
Sehrish Haleem ◽  
Awais Khan ◽  
Malik Adeel Ur Rahman
Keyword(s):  
Interest Rate ◽  
Public Debt ◽  
Significant Relationship ◽  
Government Expenditure ◽  
Optimal Level ◽  
Fiscal Sustainability ◽  
Public Expenditures ◽  
Long Run ◽  
Short Run ◽  
The Interest Rate

Through the current study it’s been tried to discuss that how fiscal sustainability is impacted by the debt which is taken by countries in order to push their economy towards prosperity and growth in Pakistan. Because the economy is considering vulnerable in terms of Public debt due to huge fiscal deficit in the economy. The ARDL approach is being applied by taking GDP as dependent variable while public debt, total revenues, government expenditures and interest rate are been taken as independent variable. The findings of the study suggested that there is strong and significant relationship exist between focused variables. Public debt is negatively associated with GDP in both short run and long run, while government expenditure give positive and significant relationship with GDP and interestingly total revenue give negative significant relationship in long run that supported the argument that the high revenues in developing nations inversely affects the investment that is pillar of GDP, so it adversely affected. The interest rate is positively significant in long run but in short run its negatively related with GDP because it affects cost of capital. The findings of study attract the attention of policy makers that we need either debt reduction strategies or either to minimize the gap between public revenues and public expenditures to promote sustain economic growth in the economy.

INFLATION AND UNEMPLOYMENT RELATIONSHIP: A DYNAMIC REPORT OF NIGERIA AND MEXICO IN THE PERSPECTIVE OF PHILLIPS CURVE FROM 1991-2016

2019 ◽  
Vol 10 (2) ◽  
pp. 11-30
Author(s):  
Oluwasefunmi Eunice Irewole
Keyword(s):  
Inverse Relationship ◽  
Phillips Curve ◽  
Positive Impact ◽  
Secondary Data ◽  
The World Bank ◽  
Long Run ◽  
Short Run ◽  
Simple Regression Analysis ◽  
The Government ◽  
The Relationship

This research study investigated the relationship between unemployment and inflation in Nigeria and Mexico from 1991-2016. Secondary data were used to gather data from the World Bank database, Central Bank of Nigeria and Bank of Mexico. In order to determine the set objective, OLS and simple regression analysis of the econometric model were used. The models specified inflation as function unemployment, money supply % GDP, total Gross Formation Products. Based on the above test carried out, the study finds out that: Inflation significantly has little impact on unemployment in Nigeria both in the long – run and short – run within the period under review. In Mexico, there is actually no significant relationship between unemployment and inflation because when inflation is high, unemployment in Mexico is also high. The study shows that investors have an inverse relationship with unemployment in Mexico. There is also an inverse relationship between inflation and GDP in Mexico and Nigeria. And in regard to the findings above the study recommends that the government should use discretionary policy that would reduce unemployment by boosting the level of investment and maintaining stability in the money sup-ply as it had a positive impact on Inflation in the long run. Friedman is of the view that the increase in government spending and the rate at which economy borrows, the higher the inflation.

scholarly journals Human Capital Development and Economic Growth Nexus in Zimbabwe

2019 ◽  
Vol 23 ◽  
Author(s):  
Sanderson Abel ◽  
Nyasha Mhaka ◽  
Pierre Le Roux
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Positive Impact ◽  
Labour Force ◽  
Government Expenditure ◽  
Human Capital Development ◽  
Long Run ◽  
Short Run ◽  
Capital Development ◽  
The Relationship

This study empirically examined the relationship between human capital development and economic growth in Zimbabwe for the period 1980 to 2015, using time series analysis techniques of co-integration, error correction model, and Granger causality tests. The study was motivated by changes which have characterised the financing of human capital since the country attained independence. A decade after independence, the government was able to adequately finance the social sectors; however, thereafter government financing has been declining since the adoption of the structural adjustment programme. The findings of this study indicate the existence of a short-run and long-run relationship between human capital development and economic growth in Zimbabwe. On the direction and significance of the relationship, the result is mixed. Human capital development, proxied by government expenditure on health, had a significant positive impact on economic growth—both in the short run and the long run—reaffirming that a healthy labour force will be more productive and efficient. Human capital development, proxied by government expenditure on education, was found to negatively impact economic growth in the long run. In conclusion, a positive relationship between human capital development and economic growth in Zimbabwe was found, although the relationship is weak.

ANALISIS PENGARUH EKSPOR TERHADAP PERTUMBUHAN EKONOMI INDONESIA

2017 ◽  
Vol 11 (1) ◽  
pp. 1-20
Author(s):  
Ari Mulianta Ginting
Keyword(s):  
Economic Growth ◽  
Export Performance ◽  
Descriptive Analysis ◽  
Correction Model ◽  
Administration System ◽  
Long Run ◽  
Short Run ◽  
Available Information ◽  
Increasing Trends ◽  
The Relationship

Ekspor merupakan salah satu faktor terjadinya peningkatan pertumbuhan ekonomi suatu negara, sejalan dengan hipotesis export-led growth (ELG). Penelitian ini menganalisis perkembangan ekspor dan pertumbuhan ekonomi Indonesia periode kuartal I 2001 sampai dengan kuartal IV 2015. Penelitian ini menggunakan analisis deskriptif dalam menggambarkan perkembangan pertumbuhan ekonomi serta ekspor dan analisis kuantitatif metode Error Correction Model (ECM) dalam menganalisis efek jangka panjang dan jangka pendek dari ekspor terhadap pertumbuhan ekonomi. Pada periode penelitian, data yang ada menunjukkan bahwa ekspor dan pertumbuhan ekonomi Indonesia sama-sama mengalami peningkatan. Hasil regresi ECM menunjukkan bahwa ekspor memiliki pengaruh yang positif dan signifikan secara statistik terhadap pertumbuhan ekonomi Indonesia, yang mendukung hipotesis bahwa ELG berlaku untuk Indonesia. Berdasarkan hasil penelitian ini, maka untuk mendorong pertumbuhan ekonomi Indonesia diperlukan peningkatan kinerja ekspor Indonesia. Peningkatan kinerja ekspor Indonesia dapat dilakukan dengan berbagai cara, salah satunya adalah dengan perbaikan sistem administrasi ekspor, peningkatan riset dan pengembangan produk Indonesia, peningkatan sarana dan prasarana infrastruktur, stabilitas nilai tukar dan perluasan pasar non tradisional, termasuk perbaikan struktur ekspor komoditas. Export is one of the factors behind the economic growth which is in line with the export-led growth hypotesis (ELG). This research analyzes the relationship between economic growth and export of Indonesia during first quarter of 2001 until fourth quarter of 2015. It employs descriptive analysis to describe export movement and economic growth during the study period and ECM model to analyze the long run and the short run effects of export on the economic growth. The available information indicated that, during the study period, both export and economic growth showed similar increasing trends. The result of the ECM model revealed that export had a positive and statistically significant relationship with the economic growth, supporting the hypotesis of ELG in Indonesia. Hence, to accelerate economic growth, efforts are required to boost the export performance in Indonesia. The Export performance can be increased by several way, such as improving the export administration system, increasing the research and development of Indonesian products, improving the facilities and infrastructure, exchange rate stability and the non-tradisional markets expansion, and including improvement of the export commodity structure.

scholarly journals INFLASI DARI SUDUT PANDANG MONETER DAN FISKAL (STUDI KASUS SUMATERA BARAT)

2019 ◽  
Vol 1 (1) ◽  
pp. 131
Author(s):  
Zul Azhar ◽  
Alpon Satrianto ◽  
Nofitasari Nofitasari
Keyword(s):  
Interest Rate ◽  
Money Supply ◽  
Government Spending ◽  
Descriptive Research ◽  
Distributed Lag ◽  
Long Run ◽  
Negative Effect ◽  
Short Run ◽  
The Interest Rate ◽  
Positive Effect

This study aims to analyze the effect of money supply M2, interest rate, government spending and local tax on the inflation in West Sumatera. This type of research is descriptive research and secondary datain the form of time-series from quartely 1 2007 to 2017 quartely 4 using the method of Autoregresive Distributed Lag analysis. The results of this study indicate that money supply in the long run have a significant and positive effect on inflation West Sumatera. In the short run  and long run the interest rate has a significant and positive effect on inflation in West Sumatera. Government spending in the Long run has a significant and negative effect on inflation in West Sumatera. Based on the result of this study can be concluded that there is inflation in West Sumatera is monetery of phenomenon in the long run. 

scholarly journals ANALISIS PENGARUH REMITANSI, INVESTASI ASING LANGSUNG, IMPOR DAN PERTUMBUHAN EKONOMI DI INDONESIA

2020 ◽  
Vol 2 (4) ◽  
Author(s):  
Regina Septriani Putri ◽  
Ariusni Ariusni
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
Positive Impact ◽  
Series Data ◽  
Long Run ◽  
Short Run ◽  
The Government ◽  
Positive Effect

Abstract : This study examined and analysis the effect of remittances, foreigndirect investment, imports, and economic growth in Indonesia in the long run andshort run. This study using Error Correction Model (ECM) method and using theannual time series data from 1989 to 2018. This study found that: (1) remittancehave an insignificant positive effect on economic growth in the long run and shortrun,(2)foreign direct investment have a significant positive impact on economicgrowth in the long run and short run, (3) import have an insignificant positiveimpact on economic growth both in the long run and short run. To increase theeconomic growth in the future, this study suggests the government to decresingimports of consume goods and increasing the inflow of capital goods, rawmaterial goods, remittances and foreign direct investment.Keyword : Remittance, Foreign Direct Investment, Import, Economic Growth andECM

scholarly journals Determinants of Islamic Rural Bank Financing in Indonesia

JEJAK ◽  
2017 ◽  
Vol 10 (2) ◽  
pp. 273-288
Author(s):  
Arif Widodo ◽  
Istianah Asas
Keyword(s):  
Exchange Rate ◽  
Global Financial Crisis ◽  
Positive Impact ◽  
Impulse Response Function ◽  
Third Party ◽  
Correction Model ◽  
Macroeconomic Variables ◽  
Bank Financing ◽  
Long Run ◽  
Short Run

This research is designed to empirically investigate the determinants of Islamic rural banking financing in Indonesia after 2008 global financial crisis covering period 2009.1-2014.12. The methods applied in this research are Error Correction Model (ECM) and VAR/VECM. The results of ECM model demonstrate that the variable third party funds (DPK) and non-performing financing can significantly affect Islamic rural banking financing both in the short run and long run, while Return on Asset (ROA) and Profit-and-loss sharing does not have a significant influence. Islamic rural bank financing, however, was influenced by inflation and exchange rate as the proxy of macroeconomic variables in the short and long run. Furthermore, Impulse Response Function (IRF) and variance decomposition results show that Profit-and-loss sharing (PLS) has the largest positive impact to financing (39.08%), followed by third party fund (19.6%) and inflation (8.9%). While, the variables that contribute to reduce financing are non-performing financing (9.02%), followed by ROA (7.76%) and exchange rate (2.48%).

scholarly journals Do FDI and Public Investment Crowd in/out Domestic Private Investment in the SADC Region

2021 ◽  
Vol 19 (1) ◽  
pp. 3-25
Author(s):  
Eslon Ngeendepi ◽  
Andrew Phiri
Keyword(s):  
Capital Expenditure ◽  
Public Investment ◽  
Trade Openness ◽  
Government Expenditure ◽  
Private Investment ◽  
Policy Implications ◽  
Domestic Investment ◽  
Government Investment ◽  
Long Run ◽  
Short Run

Our study examines the crowding-in/out effect of foreign direct investment and government expenditure on private domestic investment for 15 members of the Southern African Development Community (SADC) for the period 1991–2019. The study employed the panel Pool Mean Group (PMG)/ARDL technique in estimating the short-run and long-run cointegration relationships between FDI, government capital expenditure and domestic private investment and adds three more variables for control purposes (interest rate, GDP growth rate and trade openness). For the full sample, FDI crowds-in domestic investment whilst government crowds-out domestic investment. However, in performing a sensitivity analysis, in which the sample was segregated into low and high income economies, both FDI and government investment crowd-in domestic investment whilst government expenditure crowds-out domestic investment in lower income SADC countries with no effect of FDI on domestic investment. Policy implications are discussed.

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