Analyzing Trade Growth Effects of Deviations from Long-run Economic Growth

2017 ◽  
Vol 17 (4) ◽  
pp. 20170060 ◽  
Author(s):  
Cephas B. Naanwaab ◽  
Jeffrey A. Edwards
Keyword(s):  
Economic Growth ◽  
Low Income ◽  
First Century ◽  
Low Income Countries ◽  
Gdp Growth ◽  
Real Gdp ◽  
Long Run ◽  
Empirical Perspective ◽  
Trade Growth ◽  
The Relationship

This paper explores the relationship between trade growth and long-run trends in real GDP growth from a purely empirical perspective. Its novelty lies in the way that it models trade growth: as a function of cyclical trends in real GDP growth. The main finding is that trade growth responds asymmetrically to deviations from long-run GDP growth. Generally, trade growth is positive and statistically significant when GDP growth is above the long-run trend. On the other hand, trade growth ceases but does not become negative when GDP growth falls below its long-run trend. While this behavior holds true broadly, individual countries’ trade growth may respond differently when GDP growth is above or below trend. Comparatively, low-income countries’ trade growth takes the greatest hit when economic growth slows, while lower-middle and high-income countries are least affected. These findings have potential implications for trade policy-making in the twenty-first Century especially given the current atmosphere of anti-globalization and slow trade growth.

scholarly journals Energy Consumption, Environmental Degradation and Growth: A Panel Data Analysis

2020 ◽  
pp. 1-6
Author(s):  
Sayed Kushairi Sayed Nordin ◽  
Siok Kun Sek
Keyword(s):  
Economic Growth ◽  
Carbon Dioxide ◽  
Energy Consumption ◽  
Environmental Degradation ◽  
Low Income ◽  
Cointegration Test ◽  
Low Income Countries ◽  
Long Run ◽  
Short Run ◽  
The Relationship

Energy is essential as an input to develop economic, although it could bring negative effect on environmental quality. The relationship between energy consumption, environmental degradation and economic growth have been widely studied, but there is no consistency in the relationship. The objectives of this study are to determine the short-run relationship (one-way or bidirectional) and to reveal the long-run relationship for each pair of variables. The second-generation panel unit root and cointegration test were used in the analysis. Breusch-Pagan LM test suggests that there is a cross-sectional dependency for all the models and integrated of order one, I (1). Cointegration test indicates that economic growth has long-relationship with carbon dioxide and energy consumption in high-income countries. In low-income countries, carbon dioxide has a long-run relationship with energy consumption and economic growth. In the short run, we have evidence of a bidirectional relationship between energy consumption and economic growth in high-income countries but a one-way relationship in low-income countries. Overall, it can be concluded that the three variables are related. This study develops a deeper awareness and understanding of the relationship between the variables in distinct levels of economies. Keywords: energy consumption; CO2, economic growth

scholarly journals The Relationship Between Human Capital and the Economic Growth  in Sudan: علاقة الاستثمار في رأس المال البشري بالنمو الاقتصادي في السودان

2020 ◽  
Vol 4 (7) ◽  
Author(s):  
Suha Seifeldin Noureldaim Ahmed, Yousif Saeed Ahmed Amin, Ah
Keyword(s):  
Economic Growth ◽  
Total Population ◽  
University Education ◽  
Gdp Growth ◽  
Education Expenditure ◽  
Correction Model ◽  
Real Gdp ◽  
Long Run ◽  
Equilibrium Relationship ◽  
The Relationship

The study aims to test the relationship between investment in human capital and economic growth in Sudan. It assumed that the growth in both of enrolled in different levels of education and government expenditure on education will lead to increase the economic growth in Sudan. The variables were subjected to several econometrics tests, such as Augmented Dickey–Fuller test (ADF), Autoregressive Distributed- lagged Model (ARDL) and the Error Correction Model (ECM) to test the short- and long- term relationship between study variables. The results of long- run parameters of the (ARDL) model showed a positive correlation between real Gross Domestic Product (GDP) growth rate and the percentage of enrollment in universities from the total population. Also it showed a positive correlation between real GDP growth and education expenditure as a percentage of Gross National Income (GNI). While the estimated results of the bounds test for co- integration within the (ARDL) methodology results provided evidence of a long- run equilibrium relationship between the real GDP growth and the enrollment ratios of primary, secondary and university levels to the total population. Also provided evidence for a long- run equilibrium relationship between real GDP growth and the education expenditure as a share of GNI. Export of goods and services as a percentage of GDP and inflation rate. While the results of the estimated error correction model (ECM) confirmed that the real GDP growth is adjusted to its equilibrium value in each time period by 93% and 88%- for the two models respectively- of the remaining balance of the period with onetime lag. The study recommended the expansion of university education to raise the rate of economic growth through the development of policies to encourage investment in it, raise the quality of university education and improve the outputs quality, enhance the curricula to keep pace with the modern technology progress, linking education outputs with the needs of the labor market requirements and raising the percentage of education expenditure from GDP, as well as to encourage the governmental educational institutions to develop and diversify their self- financing resources.

Electricity consumption and economic growth in ASEAN

2017 ◽  
Vol 5 (2) ◽  
pp. 16
Author(s):  
Ahmad Ghazali Ismail ◽  
Arlinah Abd Rashid ◽  
Azlina Hanif
Keyword(s):  
Economic Growth ◽  
Energy Use ◽  
Electricity Consumption ◽  
Panel Estimation ◽  
Real Gdp ◽  
Long Run ◽  
Bidirectional Relationship ◽  
Short Run ◽  
Using Data ◽  
The Relationship

The relationship and causality direction between electricity consumption and economic growth is an important issue in the fields of energy economics and policies towards energy use. Extensive literatures has discussed the issue, but the array of findings provides anything but consensus on either the existence of relations or direction of causality between the variables. This study extends research in this area by studying the long-run and causal relations between economic growth, electricity consumption, labour and capital based on the neo-classical one sector aggregate production technology mode using data of electricity consumption and real GDP for ASEAN from the year 1983 to 2012. The analysis is conducted using advanced panel estimation approaches and found no causality in the short run while in the long-run, the results indicate that there are bidirectional relationship among variables. This study provides supplementary evidences of relationship between electricity consumption and economic growth in ASEAN.

Development Growth Models for Singapore and Malaysia: A Geweke Causality Analysis

2015 ◽  
Vol 8 (2) ◽  
pp. 165-186 ◽  
Author(s):  
Tan Khee Giap ◽  
Nguyen Le Phuong Anh ◽  
Ye Ye Denise
Keyword(s):  
Economic Growth ◽  
Linear Dependence ◽  
Growth Models ◽  
Growth Dynamics ◽  
Gdp Growth ◽  
Multiple Time ◽  
Causality Analysis ◽  
Content Type ◽  
Real Gdp ◽  
Long Run

Purpose Nearly five decades after undergoing a structural transformation and navigating several external shocks, both Singapore and Malaysia are now grappling with some crucial policy challenges that necessitate a course-correction in order to sustain their growth momentum, going forward. In light of the renewed interest in understanding the growth constraints faced by the two countries, this paper aims to empirically explore the drivers of economic growth in both Singapore and Malaysia, using data from 1975 to 2012. Design/methodology/approach The paper employs a novel empirical approach-the Geweke causality analysis-to investigate the causal drivers of economic growth in Singapore and Malaysia. Intuitively, the Geweke causality analysis helps us understand and measure the linear dependence and feedback between multiple time series variables. To that effect, we perform both a bi-variate as well as a multi-variate causality analysis. Findings The empirical results established using Geweke causality analysis suggest that Malaysia's new development trajectory should lie in rebalancing the economy toward greater domestic demand and building a robust services sector. The results also suggest that Singapore, on the other hand, should embrace a growth model that goes beyond relying heavily on foreign direct investment (FDI) as a source of economic growth as the linear dependence between FDI and real GDP growth appears to be weaker compared to the linear dependence between the remaining variables and the real GDP growth. Originality/value While the traditional growth accounting framework provides useful insights at the aggregate level, there is a growing literature that discusses the importance of sectoral analysis to understand structural transformations in the economies which become important to sustain productivity growth in the long-run. This is immensely relevant in the case of Malaysia and Singapore, as well, especially with the changing policy focus in these countries to overcome structural growth issues. In light of this growing discussion on the importance of understanding the growth dynamics at the sectoral level, this paper presents new empirical evidence on the growth drivers in Singapore and Malaysia with a sectoral focus.

scholarly journals The Role of Population in Economic Growth

SAGE Open ◽  
2017 ◽  
Vol 7 (4) ◽  
pp. 215824401773609 ◽  
Author(s):  
E. Wesley F. Peterson
Keyword(s):  
Economic Growth ◽  
Population Growth ◽  
Low Income ◽  
Low Income Countries ◽  
High Population Growth ◽  
Economic Analyses ◽  
The Relationship ◽  
Lower Population ◽  
Capita Output

The relationship between population growth and economic growth is controversial. This article draws on historical data to chart the links between population growth, growth in per capita output, and overall economic growth over the past 200 years. Low population growth in high-income countries is likely to create social and economic problems while high population growth in low-income countries may slow their development. International migration could help to adjust these imbalances but is opposed by many. Drawing on economic analyses of inequality, it appears that lower population growth and limited migration may contribute to increased national and global economic inequality.

scholarly journals Taxation, government spending and economic growth: The case of Bulgaria

2021 ◽  
Vol 7 (3) ◽  
pp. 255-266
Author(s):  
G. Ganchev ◽  
◽  
I. Todorov ◽  
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Tax Revenue ◽  
Gdp Growth ◽  
Real Gdp ◽  
Long Run ◽  
Gdp Growth Rate ◽  
Short Run ◽  
The Impact

The objective of this article is to estimate the impact of three fiscal instruments (direct taxes, indirect taxes, and government expenditure) on Bulgaria’s economic growth. The study employs an autoregressive distributed lag model (ARDL) and Eurostat quarterly seasonally adjusted data for the period 1999–2020. Four control variables (the shares of gross capital formation, household consumption, and exports in GDP as well as the economic growth in the euro area) are included in the model to account for the influence of non-fiscal factors on Bulgaria’s real GDP growth rate. The empirical results indicate a long-run equilibrium relationship between Bulgaria’s economic growth and the independent variables in the ARDL. In the short term, Bulgaria’s real GDP growth rate is affected by its own past values and the previous values of the shares of direct tax revenue, exports, government consumption, and indirect tax revenue in GDP. In the long term, Bulgaria’s economic growth is influenced by its own previous values and the past values of the share of household consumption in GDP and the euro area’s real GDP growth rate. Fiscal instruments can be used to stabilize Bulgaria’s growth in the short run but they are neutral in the long run. The direct tax revenue, government consumption, and indirect tax revenue are highly effective and can be used as tools for invigorating and stabilizing Bulgaria’s economic growth in the short run. However, in the long term, the real GDP growth rate can be hastened only by encouraging domestic demand (final consumption expenditure of households) and promoting exports. This research cannot answer the question of whether flat income taxation stabilizes the economy or not, since it does not separate the impact of tax rate changes from the influence of tax base modifications.

Establishing finance-growth linkage for India: a financial conditions index (FCI) approach

2019 ◽  
Vol 14 (5) ◽  
pp. 1032-1059 ◽  
Author(s):  
A.K. Giri ◽  
Deven Bansod
Keyword(s):  
Economic Growth ◽  
Global Financial Crisis ◽  
Gdp Growth ◽  
Data Sets ◽  
Content Type ◽  
Real Gdp ◽  
Financial Conditions ◽  
Multiple Markets ◽  
Long Run ◽  
The Global Financial Crisis

Purpose The global financial crisis of 2008 emphasized the need for monetary policy authorities to have a more comprehensive view of the conditions prevailing in the economy before deciding their policy stance. The purpose of this paper is to outline the construction of a financial conditions index (FCI) and investigate the possible co-integrating relationship between the economic growth and FCI. Design/methodology/approach The study employs the PCA methodology, with appropriate augmentations to handle the unbalanced panel data-sets and constructs a FCI for India. It tests the growth-predicting power of FCI by applying the auto regressive distributed lags approach to co-integration and verifies if the FCI is co-integrated with real GDP growth. It also discusses construction of a financial development index (FDI) which tracks the financial markets through M3, market capitalization and credit amount to residents. Findings The constructed FCI has a quarterly frequency and is available starting 1998q2. The long-run coefficient of FCI while predicting the real GDP growth is significant at 10 percent. The results confirm that a more-broader index FCI outperforms a narrower index FDI in growth prediction. Research limitations/implications By showing that FCI is a better growth predictor than FDI, the study establishes the importance of including the foreign exchange markets, bond markets and stock markets while summarizing the conditions in the economy. The authors hope that the FCI would be helpful to the monetary authorities in their policy decisions. Originality/value The paper adds to the few existing studies studies dealing with FCI for Indian economy and constructs a more comprehensive index which tracks multiple markets simultaneously. It also fills the gap in literature by evaluating the correlating relationship between FCI and economic growth.

The Relationship Among Poverty, Economic Growth, and Inequality Revisited

2008 ◽  
pp. 5
Author(s):  
Lonnie K. Stevans ◽  
David N. Sessions
Keyword(s):  
Economic Growth ◽  
The United States ◽  
Poverty Rate ◽  
Gdp Growth ◽  
Correction Model ◽  
Long Run ◽  
Formal Error ◽  
The 1960S ◽  
The Relationship ◽  
Over Time

It has been shown in prior research that increased economic growth reduces poverty. Authors have also found that the effect of growth in Gross Domestic Product (GDP) on poverty growth has either diminished or remained unchanged over time, and economic expansion in the 1980s in the United States had no affect on poverty. Using a formal error-correction model, we find that increases in economic growth are significantly related to reductions in the poverty rate for all families. Specifically, GDP growth was found to have a more pronounced effect on poverty during the expansionary periods of the 1960s, 1970s, 1980s, 1990s, and 2000s. Other findings include identification of determinants of the dynamic behavior of poverty rates both in the yearto- year periods and over the long run.

scholarly journals Growth effects of migrants’ remittances in selected Sub-Saharan African countries

2013 ◽  
Vol 6 (3) ◽  
Author(s):  
Taiwo Ajilore ◽  
Sylvanus Ikhide
Keyword(s):  
Economic Growth ◽  
Cape Verde ◽  
Sub Saharan Africa ◽  
Empirical Literature ◽  
African Countries ◽  
Country Level ◽  
Real Gdp ◽  
Long Run ◽  
Sub Saharan ◽  
The Relationship

The study examined the assumption that ‘size matters’ in the empirical controversy of the relationship between migrants’ remittances and economic growth. This is done through an empirical analysis of the remittances-growth relationships in selected countries in Sub-Saharan Africa, where remittance inflows are overwhelming proportions of real GDP. The study used data at the country level, for five countries: Cape Verde, Lesotho, Nigeria, Senegal and Togo. The long-run ARDL estimates indicate positive and significant effects of migrants’ remittances on growth performance in Cape Verde and Nigeria, but negative, and slightly significant effects for Lesotho, with no evidence of long-run level relationships between remittances and economic growth in Senegal and Togo. Thus, the assumption that size may matter in the remittance–growth nexus finds no support, as findings provide no significant departure from the existing inconclusiveness of empirical literature on the relationship. For policy, the study advocates country-level policies that improve the efficiency of remittance inflows and promote the use of remittances for developmental purposes.

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