scholarly journals Trade Openness Effect on Income Inequality: Empirical Evidence from Indonesia

2018 ◽  
Vol 7 (1) ◽  
pp. 1-14
Author(s):  
Lestari Agusalim ◽  
Fanny Suzuda Pohan
Keyword(s):  
Economic Growth ◽  
Income Inequality ◽  
Negative Impact ◽  
Forecast Error ◽  
Trade Openness ◽  
Impulse Response Function ◽  
Secondary Data ◽  
Error Variance ◽  
Long Run ◽  
Forecast Error Variance

This research analyzed the effect of international trade openness to income inequality in Indonesia using Vector Error Correction Model (VECM). The data used is the secondary data, which are the export-import value, gross domestic product (GDP), GDP per capita, open unemployment rate, and Gini index. The results of this study indicate that in the short term the trade openness has negative impact significantly on the income inequality. However, in the long-run, it does not show any significant effect in decreasing the income inequality rate. The impulse response function (IRF) concluded that income inequality gives a positive response, except on the third year. Based on the forecast error variance decomposition (FEDV), the trade openness does not provide any significant contribution in effecting the income inequality in Indonesia, but economic growth does. Nevertheless, in long-term, the economic growth makes the income inequality getting worse than in the short-term.DOI: 10.15408/sjie.v7i1.5527

scholarly journals KAJIAN AKTIVITAS EKONOMI LUAR NEGERI INDONESIA TERHADAP PERTUMBUHAN EKONOMI INDONESIA PERIODE 1998-2014

2017 ◽  
Vol 9 (2) ◽  
pp. 119
Author(s):  
Ryan Hawari ◽  
Fitri Kartiasih
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Direct Investment ◽  
Forecast Error ◽  
Foreign Debt ◽  
Trade Openness ◽  
Impulse Response Function ◽  
Error Variance ◽  
Forecast Error Variance

Indonesia is a developing country which adopts an “open economic”. That caused Indonesia economic is strongly influenced by factors that come from outside of Indonesia. External factors in this research is referred to foreign debt, foreign direct investment, trade openness and exchange rate of rupiah with USD. The analytical method in this research used Vector Error Correction Model (VECM) which will focused on Impulse Response Function (IRF) and Forecast Error Variance Decomposition (FEVD). Based on result of IRF, exchange rate had a positive effect to economic growth, while foreign debt, foreign direct investment and trade openness had a negative effect to economic growth. Based on result of FEVD, shock on economic growth in Indonesia affected by economic growth itself (43.21%), followed by foreign debt (26.30%), trade openness (14.16%), foreign direct investment (8.29%) and exchange rate (8.04%) Keywords: economic growth, trade openness, VECM, IRF, FEVD

scholarly journals Contribution of conventional bank lending for agricultural sector in Indonesia

2021 ◽  
Vol 9 (4) ◽  
pp. 331-342
Author(s):  
Hari Setia Putra ◽  
Yunnise Putri ◽  
Ali Anis ◽  
Zul Azhar
Keyword(s):  
Interest Rates ◽  
Agricultural Sector ◽  
Forecast Error ◽  
Impulse Response Function ◽  
Error Variance ◽  
Bank Lending ◽  
Long Run ◽  
Negative Effect ◽  
Forecast Error Variance ◽  
Conventional Bank

This study examines the determinant contribution of conventional bank lending for the agricultural sector in Indonesia. The analysis method used in this research is the Vector Correction Model (VECM). The results showed that in the short term, there was no significant effect of the Non-Performing Loan (LogNPL), GDP of Agricultural Sector (LogPDB), and Agricultural Sector Credit Interest Rates (SBK). However, there is an effect of the LogNPL and LogPDB on the conventional bank lending for the agricultural sector in the long term. The LogNPL has a significant positive effect on the contribution of conventional bank lending to the agricultural sector. While the LogPDB has a significant negative effect on the contribution of conventional bank lending for the agricultural sector. The Impulse Response Function (IRF) analysis results show that shocks to the LogNPL respond negatively in the long run, shocks to the LogPDB respond positively in the long run, and shocks to the SBK respond negatively in the long run by conventional bank lending for the agricultural sector. Through the analysis of FEVD (Forecast Error Variance Decomposition), it is known that the biggest contribution to conventional bank lending for the agricultural sector is agricultural credit and GDP.

scholarly journals Public Expenditure and Economic Growth in India: An Empirical Analysis Using Vector Autoregression (VAR) Model

2020 ◽  
Vol 5 (2) ◽  
pp. 45-58
Author(s):  
Rashmi Gupta ◽  
Swati Shastri
Keyword(s):  
Economic Growth ◽  
Public Expenditure ◽  
Forecast Error ◽  
Granger Causality Test ◽  
Error Variance ◽  
Var Model ◽  
Impulse Responses ◽  
Causality Test ◽  
Long Run ◽  
Forecast Error Variance

Objective – The objective of this study is to test direction of causality between components of public expenditure and economic growth in India. Methodology/Technique – The paper uses annual data for the period 1980-2015. To measure public expenditure, plan expenditure and non-plan expenditure are used. The econometric methodology employed is Vector Auto regression (VAR) model. Findings – First, the stationary properties of the data were tested using Augmented Dickey-Fuller (ADF) test, Dickey-Fuller (DF) test, and the Phillip-Perron (PP) test and found that variables were non-stationary in level, but stationary in first differences. Then, Johansen- Jueslius cointegration test was employed to test the long-run association among the variables and results suggest an absence of any long-run association between plan expenditure and non-plan expenditure and economic growth in India. The Granger Causality test suggests there is unidirectional causality running from economic growth and non-plan expenditure and plan expenditure and non-plan expenditure and absence of causality public expenditure and economic growth. Novelty – The results of the Forecast Error Variance Decompositions test indicated that innovations in the variables are mostly explained by their own shocks. The impulse responses of the economic growth, plan expenditure and non-plan expenditure with respect to identified shocks are consistent with the results of Variance Decomposition Analysis. Type of Paper: Empirical. JEL Classification: O4, O49, O53. Keywords: Plan Expenditure; Non-plan Expenditure; Economic Growth; Unit Root; Cointegration Test; Granger Causality Test; Forecast Error Variance Decomposition; Impulse Responses. Reference to this paper should be made as follows: Gupta, R; Shastri, S. 2020. Public Expenditure and Economic Growth in India: An Empirical Analysis Using Vector Autoregression (VAR) Model, J. Bus. Econ. Review 5(2) 45– 58 https://doi.org/10.35609/jber.2020.5.2(1)

scholarly journals Assessing the progress of exports diversification in Saudi Arabia: growth-share matrix approach

2020 ◽  
Vol 18 (3) ◽  
pp. 118-128
Author(s):  
Mohammad Imdadul Haque
Keyword(s):  
Growth Rate ◽  
Saudi Arabia ◽  
Forecast Error ◽  
Impulse Response Function ◽  
Error Variance ◽  
Vector Autoregressive ◽  
Long Run ◽  
Market Shares ◽  
Forecast Error Variance ◽  
Revenue Volatility

High dependence on a particular category of exports results in fluctuations in income as the price of the export item fluctuates. In Saudi Arabia, a single category of mineral exports forms over 78% of the total exports, exposing the country to revenue volatility. The study aims to assess the magnitude of diversification of the export basket for the country. It uses data from 1984 to 2018 to study the importance of non-mineral exports in total exports. It applies Granger causality, variance decomposition, and impulse response function in the vector autoregressive framework. The study also uses the growth-share matrix to evaluate individual items of non-mineral exports. The results show a long-run relationship with a 1% increase in non-mineral exports, leading to a 0.30% increase in total exports. Non-mineral exports Granger-cause total exports. In the long run, non-mineral exports have a share of 64% of the forecast error variance in total exports. Moreover, a 1% shock in non-mineral exports creates a huge initial impact on total exports. Also, the growth rate of non-mineral products is higher than mineral products. The results indicate the importance of non-mineral exports for a predominantly oil-exporting country. Finally, the study attempts to classify its non-mineral export categories based on growth rates and market shares. Targeted emphasis on export category with a strong growth rate and low market share can be an effective strategy for further export diversification.

scholarly journals Oil Prices and the U.S. Dollar Exchange Rate: Evidence from the Monetary Model

2018 ◽  
Vol 10 (4) ◽  
pp. 17
Author(s):  
Moayad H. Al Rasasi
Keyword(s):  
Exchange Rate ◽  
Forecast Error ◽  
Negative Relationship ◽  
Impulse Response Function ◽  
Decomposition Analysis ◽  
Oil Prices ◽  
Error Variance ◽  
Monetary Model ◽  
Forecast Error Variance ◽  
Positive Shock

This paper analyzes how changes in global oil prices affect the US dollar (USD) exchange rate based on the monetary model of exchange rate. We find evidence indicating a negative relationship between oil prices and the USD exchange rate against 12 currencies. Specifically, the analysis of the impulse response function shows that the depreciation rate of the USD exchange rate ranges between 0.002 and 0.018 percentage points as a result of a one-standard deviation positive shock to the real price of crude oil. In the same vein, the forecast error variance decomposition analysis reveals that variation in the USD exchange rate is largely attributable to changes in the price of oil rather than monetary fundamentals. In last, the out-of-sample forecast exercise indicates that oil prices enhance the predictability power of the monetary model of exchange rate.

scholarly journals Impact of Trade Openness and Human Capital on Economic Growth: A Comparative Investigation of Asian Countries

2020 ◽  
Vol 12 (7) ◽  
pp. 2930 ◽  
Author(s):  
Rabail Amna Intisar ◽  
Muhammad Rizwan Yaseen ◽  
Rakhshanda Kousar ◽  
Muhammad Usman ◽  
Muhammad Sohail Amjad Makhdum
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Negative Impact ◽  
Trade Openness ◽  
Least Square ◽  
Ordinary Least Square ◽  
Southern Asia ◽  
Long Run ◽  
Western Asia ◽  
The Impact

The aim of this study is to analyze the impact of trade openness and human capital on economic growth in 19 Asian countries from 1985 to 2017. We selected two geographically distributed regions (Western and Southern Asia) based on difference in their GDP per capita. We applied the unit root tests to examine the level of stationarity and found that all variables were integrated at first difference. Kao and Fisher cointegration tests were employed and the results revealed the presence of a long-run relationship. We applied fully modified ordinary least square (FMOLS) and dynamic ordinary least square (DOLS) models to check the magnitude of the long-run coefficients among trade openness, human capital and economic growth. To investigate the direction of causality, we used a Dumitrescu and Hurlin (DH) causality test. The results indicated that trade openness and human capital have a significant and positive relationship while labor force participation has a negative effect on economic growth in Southern Asia, and in the case of Western Asia, the impact is positive. Foreign direct investment (FDI) has a negative and significant impact on GDP per capita (GDPPC) in Western Asia while it is positive and significant in Southern Asia; Total population (TPOP) has a negative impact on GDPPC in both regions. Furthermore, human capital has a positive and significant impact on trade openness in both panels. Meanwhile, labor force participation (LFP) has a positive and significant impact on trade openness in Southern Asia and a negative impact in the case of Western Asia. Trade openness and economic growth have bidirectional causality in Western Asia and unidirectional causality in Southern Asia. It also shows that human capital and economic growth have unidirectional causality in both regions.

scholarly journals Measuring monetary policy by money supply and interest rate: evidence from emerging economies

2021 ◽  
Vol 21 (3) ◽  
pp. 347-367
Author(s):  
Trung Thanh Bui ◽  
Kiss Dávid Gábor
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Money Supply ◽  
Emerging Economies ◽  
Forecast Error ◽  
Impulse Response Function ◽  
Error Variance ◽  
Limited Effect ◽  
Forecast Error Variance

Abstract Although measuring monetary policy is a contentious issue in the literature, much less evidence on this issue is available for emerging economies. This paper aims to investigate the role of interest rate and money supply in measuring monetary policy in twelve emerging economies that target inflation through the analysis of Granger causality, impulse response function, and forecast error variance decomposition. The empirical results show that both money supply and interest rate are useful predictors for changes in inflation. Moreover, both show a comparable power to explain the variation of inflation. However, a rise in interest rate increases rather than decreases inflation, whereas money supply has a positive and expected effect on inflation. These findings suggest that interest rate may not fully capture the overall stance of monetary policy or interest rate has a limited effect on inflation.

scholarly journals Dynamic Impact of Trade Openness on the Economic Growth in Nigeria

2019 ◽  
Vol 8 (5C) ◽  
pp. 609-616
Keyword(s):  
Economic Growth ◽  
Trade Openness ◽  
Unit Root Test ◽  
Secondary Data ◽  
Dynamic Impact ◽  
Long Run ◽  
Short Run ◽  
Private And Public ◽  
The Government ◽  
The Masses

In theory, it was conforming to the accepted standard the open economies grow faster than the closed economies, and respectable economic development level could be achieved. This paper investigates the dynamic impact of trade openness on the economic growth in Nigerian economy between 1980 - 2016 empirically. Secondary data were sourced, from the 2016 Central Bank of Nigeria Statistical Bulletin’. The tests of diagnostic conducted are: cointegration test, unit root test and error correction model. The analysis result revealed the trade openness was found to have negatively impacted on the economic growth in both the short run and long run. Based on study findings, it is recommended that since the imports of the country are more than its export; the government needs to have the present efforts to sustain the diversification of the economy to achieve economic growth led by exports. Furthermore, the collaborative effort of government with private sectors should encourage the export substitute in the nation to discourage importation and promote export of primary commodities especially the ones that have absolute advantages to the nation. Lastly, the study also recommended that the government of the country should sustain the policy of Treasury Single Account (T.S.A) so as that the loopholes will be blocked in the private and public sectors of the nation, and also to make sure there is equity in the utilization of the revenue generated internally for the masses to benefit.

Cyclical Fluctuations, Macroeconomic Policy, and the Size Distribution of Income: Some Preliminary Evidence

1995 ◽  
Author(s):  
J. H. Haslag ◽  
D.J. Slottje
Keyword(s):  
Economic Growth ◽  
Size Distribution ◽  
Time Trends ◽  
Forecast Error ◽  
Error Variance ◽  
Preliminary Evidence ◽  
Income Growth ◽  
Cyclical Fluctuations ◽  
Forecast Error Variance ◽  
Distribution Of Income

The question has been asked as to how changes in economic growth affect income distribution. Blinder and Esaki reframed the question to consider inflation and time trends in addition to aggregate income growth. The purpose of this paper is to widen the scope even more; specifically, the question is whether policy or business cycle measures explain most of the forecast error variance in the size distribution of income.

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