scholarly journals Impact of economic growth on international reserve holdings in Brazil

2017 ◽  
Vol 37 (3) ◽  
pp. 605-614 ◽  
Author(s):  
MOHAMMAD KASHIF ◽  
P. SRIDHARAN ◽  
S. THIYAGARAJAN
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Correction Term ◽  
International Reserves ◽  
Speed Of Adjustment ◽  
Error Correction Term ◽  
Long Run ◽  
Short Run ◽  
Using Data ◽  
The Impact

ABSTRACT This study investigated the impact of economic growth on Brazilian international reserves holdings in the context of Error Correction Mechanism using data over the 1980-2014 period. The results reveal that economic growth is highly significant. From the estimation of our model, we argue that economic growth and international reserves have positive long run relationship. Error correction estimates validated our model for error correction term is negative and statistically significant. Besides, our model suggested that economic growth has short run relationship too. The speed of adjustment is more than 40% which indicated that error correction term corrects previous year disequilibrium at the rate of 40.4%.

The Impact of Foreign Aid on Economic Growth in Ethiopia

2020 ◽  
Author(s):  
Belay Asfaw Gebresilassie ◽  
Girma Gezmu Gebre
Keyword(s):  
Economic Growth ◽  
Foreign Aid ◽  
Error Correction ◽  
Negative Impact ◽  
Correction Term ◽  
Annual Data ◽  
Close Monitoring ◽  
Long Run ◽  
Short Run ◽  
The Impact

Abstract This study analyzes the impact of foreign aid on economic growth in Ethiopia based on time series annual data for the period of 1974 to 2017. Autoregressive distributed lag Approach to Co-integration and Error Correction Model was applied in order to investigate the long-run and short-run relationship between dependent and the independent variables. The empirical results from econometrics model reveal that foreign aid has negative impact on economic growth in both long run and short run and statistically significant at 1 percent significant level. The negative and significant error correction term shows that the short run disequilibrium adjusts to its long run equilibrium by 84.6 percent each year. The important policy implication of this study suggests that more effort has to be made to improve the negative impact of foreign aid, mainly because of existence of poor institutional arrangement that contributes the fund to unproductive sectors. The government has to ensure, a close monitoring and consistent management strategies, which is used to avoid misallocation and mismanagement problems and has to ensure that foreign aid is linked to the productive sectors to optimize the benefits.

Money Supply-Economic Growth Nexus: Evidence from a Landlocked Country

2020 ◽  
Vol 2 (1) ◽  
pp. 106-115
Author(s):  
Tilak Singh Mahara
Keyword(s):  
Economic Growth ◽  
Money Supply ◽  
Correction Term ◽  
Policy Instruments ◽  
Special Role ◽  
Real Gdp ◽  
Long Run ◽  
Ardl Approach ◽  
Short Run ◽  
The Impact

Background: There is special role of money in the economy due to its astonishing importance as change in the amount of it can have a significant effect on the major macroeconomic variables. Money supply is generally considered as policy-determined phenomenon. Like in all the nations, macroeconomic stability of Nepal also depends on the variation in the quantity of money. Objective: The principle objective of the study is to examine the impact of money supply on the economic growth of Nepal. Methodology: This study applies the ARDL approach to cointegration. Bounds test (F-version) has been carried out to determine the existence of long-run relationship between variables. Results: The empirical results pointed out that there is positive and significant long-term relationship between money supply and real economic growth in Nepal. Causality result reveals that there is unidirectional causality from money supply (M2) to Real GDP. The error correction term is found negative and statistically significant suggesting a correction of short-run disequilibrium within two and a half years. Conclusions: The study concludes that increase in the money supply helps to increase the real economic growth in Nepal. So, money supply and real GDP are associated in the long-run.  Implications: The implication of the study is that, real economic growth in Nepal can be achieved if Nepal Rastra Bank emphasized on monetary policy instruments which help to increase the flow of money supply both in the short and long run.

scholarly journals Impact of Government Expenditure in Economic Growth of Nepal: ARDL Approach

2019 ◽  
Vol 3 (1) ◽  
pp. 33-40
Author(s):  
Keshar Bahadur Kunwar
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Unit Root ◽  
Public Expenditure ◽  
Correction Term ◽  
Percent Level ◽  
Series Data ◽  
Error Correction Term ◽  
Long Run ◽  
Lm Test

Public expenditure refers to the expenditure made by public authority, i.e., central government and other local bodies to carter the demand of the people. It is for protecting the citizens and for promoting their economic and social welfare. Public expenditure is one of the instruments through which government influence economic events. The specific objective of this paper is to analyze the long run and short run relationship between public expenditure and economic growth in Nepal and to examine the Causal relationship between the public expenditure and economic growth in Nepal. The study employed quantitative techniques and econometrics methods to analyze the data. This study used time series data. Data analysis begins with the testing of the unit root of the series to confirm whether the data are stationary or not. Augmented Dicky Fuller unit root test, co-integration test is employed to check the relationship of the variables under study. One period lagged LNGE has significant and positive impact on RGDP. If 1 percent increase in GE leads to increase by 34.99 percent in RGDP at 5 percent level of significance. The coefficient of error correction term (-0.782018) is significant at one percent level. Highly significant negative sign of the error correction term strengthens the presence of long-run relationship among the variables. However, the speed of adjustment from previous year’s disequilibrium in RGDP added to current year’s equilibrium is only 78.20 percent. The P-value of Breusch-Godfrey serial Correlation LM Test, Heteroscedasticity test: Breusch-Pagan-Godfrey and normality test is greater than 5 percent which is desirable. So, this model is free from auto correlation and heteroscedasticity. The residual is normally distributed.

scholarly journals Inflation and Economic Growth Paradox: A Co-integration Analysis in Nepal

2021 ◽  
Vol 2 (3) ◽  
pp. 1-12
Author(s):  
Uttam Lal Joshi
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Correction Term ◽  
Unit Roots ◽  
Threshold Level ◽  
Long Run ◽  
Augmented Dickey Fuller ◽  
Short Run ◽  
Lag Model ◽  
Monetary And Fiscal Policy

The empirical study investigates the relationship between economic growth, inflation and broad money supply in Nepal. Data since 1965 to 2020 are taken from World Bank and Autoregressive Distributive Lag Model is used to find cointegration between the variables to show long run and short run dynamics. Augmented Dickey- Fuller and Philips- Perron tests are conducted to find the unit roots in the model. Result shows the error correction term is negative (-0.75) and significant (0.0043) where bounds test supports the long run cointegration and error correction model suggest the speed of adjustment. The estimated regression equation is found robust and stable (serial correlation and heteroskedacity tests).  The research shows inflation has short run and long run impact on economic growth so inflation should be kept within its threshold level from sound monetary and fiscal policy mechanism.

scholarly journals Infrastructure Development and Economic Growth in Nepal

2020 ◽  
Vol 23 (2) ◽  
pp. 131-144
Author(s):  
Bashu Dev Dhungel
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Tertiary Education ◽  
Correction Term ◽  
Percent Level ◽  
Infrastructure Development ◽  
Error Correction Term ◽  
Stable Relationship ◽  
Active Population ◽  
Long Run

This article, on infrastructure development and economic growth in Nepal, focuses on the infrastructure development that seems to affect economic growth in Nepal during the study period 1994-2018. To investigate the casual relationship between infrastructure development and the economic growth, this study has employed Engel-Granger cointegration test and Error Correction Mechanism (ECM) model. The results showed a cointegration and a stable relationship between gross domestic product and infrastructure variables—such as total length of road, percentage of economically active population, percentage of tertiary education enrollment, and gross capital formation. In addition, the coefficient of Error Correction term was -0.88—signifying about 88 percent adjustments towards equilibrium, confirmed by the occurrence of a stable long-run relationship among the variables. The sign of Error correction term (Ect) became negative and statistically significant at the 1 percent level, indicating the possibility of convergence towards equilibrium in each period with adjustment captured by difference terms. This study has its implication for policymakers to raise economic growth through infrastructure development. The expansion of infrastructure network leads to the enhancement of efficiency and competitive market, and the acceleration of the economic growth within the country.

scholarly journals REVISITING THE EXPORT-LED GROWTH HYPOTHESIS USING ARDL APPROACH: EMPIRICAL EVIDENCE FROM KAZAKHSTAN

2021 ◽  
Vol 7 (1) ◽  
Author(s):  
Imtiyaz Ahmad Shah ◽  
Shabir Ahmad Najar ◽  
Bilal Ahmad Khan
Keyword(s):  
Correction Term ◽  
Labour Force ◽  
Speed Of Adjustment ◽  
Independent Variables ◽  
Long Run ◽  
Ardl Approach ◽  
Short Run ◽  
Per Capita ◽  
The Impact ◽  
Growth Hypothesis

The paper aims to examine the impact of exports on Kazakhstan's economic growth. The effect of exports is determined through a neoclassical production function, examining exports' role after controlling the labour force and capital formation. The analysis is based ARDL model on testing for the short-run and long-run effects of independent variables. The long-run coefficient of exports is 0.38, while the short-run coefficient is 0.28 and statistically significant. Therefore, exports impact positively on G.D.P. per capita in both the short-run and long-run. Also, coefficient of error correction term (E.C.M.) is negative and statistically significant, showing the speed of adjustment towards equilibrium from short-run to long-run. Therefore, Kazakhstan's government should focus on increasing the exports that can increase the G.D.P. per capita better.

scholarly journals The Service Sector-Led Growth Relationship: The Case of Nigeria

2021 ◽  
pp. 90-111
Author(s):  
Ubong Edem Effiong ◽  
Joel Isaac Okon
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Error Correction ◽  
Service Sector ◽  
Domestic Product ◽  
Long Run ◽  
Error Correction Mechanism ◽  
Short Run ◽  
Bounds Test ◽  
The Impact

This paper examined the impact of the service sector on economic growth of Nigeria. The study covers the period 1981 to 2019 and data were obtained from the Central Bank of Nigeria statistical bulletin. The Augmented Dickey-Fuller unit root, Granger Causality test, Vector Autoregressive (VAR) approach, Bounds test for cointegration, and vector error correction mechanism were utilized in analysing the data. Findings of the study revealed that a bidirectional causality exist between service sector and economic growth of Nigeria. Meanwhile, the VAR result presented an evidence of weak exogeneity of the service sector in predicting economic growth. However, both broad money supply and total government expenditure exerted a significant impact on economic growth. From the impulse response function, it was discovered that economic growth responded negatively to shocks in service sector output both in the short run and in the long run; while the variance decomposition indicated that gross domestic product (a proxy for economic growth) is strongly endogenous in predicting itself in the short run while such diminishes in the long run. The Bounds test for cointegration revealed evidence of long run equilibrium relationship and the error correction mechanism revealed that 88.30% of the short run disequilibrium in the gross domestic product are corrected annually. Meanwhile, it was discovered that professional, scientific and technical services is the major contributor to economic growth as captured by its short run and long run elasticity coefficients of 0.5936 and 0.9455 respectively. The paper recommended the need for stimulating industrialization as this is the major pathway through which the service sector can positively impact economic growth.

scholarly journals Product Tax Revenue and Economic Growth in Nigeria: An Engle-Granger Approach, Evidence From 1981 - 2019

2020 ◽  
Vol 1 (2) ◽  
pp. 66-76
Author(s):  
Henry Ikechukwu Amalu ◽  
Thaddeus Nnaemeka Ukwueze ◽  
Loenard U. Olife ◽  
Favour Friday Irokwe
Keyword(s):  
Economic Growth ◽  
Fiscal Policy ◽  
Error Correction ◽  
Granger Causality ◽  
Unit Root ◽  
Speed Of Adjustment ◽  
Long Run ◽  
Step Procedure ◽  
Error Correction Mechanism ◽  
Short Run

Purpose: Product tax is an essential tool for governments, serving both as a revenue generator and fiscal policy instrument. The paper examines short-run and long-run relationships shared by product taxes and economic growth in Nigeria for the period, 1981 to 2019. Approach/Methodology/Design: The study checks the stationarity properties of the series by testing them for unit roots using Augmented Dickey Fuller (ADF) method and Philip-Perron unit root test. Both unit root tests indicate that the series is stationary at first difference. In view of this, the study deploys a cointegration technique, Engle-Granger two-step procedure to determine the long-run and short-run links shared by the variables of interest. The Error Correction Mechanism (ECM) estimation and the Granger causality estimations for speed of adjustment and causality of the variables were also used. Findings: The results reveal that product tax revenues and economic growth cointegrate in the long-run; while product tax revenues exert a significant positive effect on economic growth both in the short-term and long-term. The outcome of the Error Correction Mechanism (ECM) estimation shows a swift speed of adjustment to a new long-run equilibrium after a shock. The outcome of the Granger causality estimations indicates a uni-directional causality from economic growth to revenues from product taxes. Practical Implications: This study is significant at this point when the country is facing increasing economic challenges. It will be useful to policy makers who might want to explore the possibility of using product tax as a fiscal policy tool, and a source of revenue to augment the declining revenue of the government from other sources. Originality/value: The paper explores short-run and long-run relationships shared between product taxes and economic growth in Nigeria using a two-step procedure of Engle and Granger, and it verifies causality link between the later and the former.

scholarly journals Agriculture as a Determinant of Zambian Economic Sustainability

2020 ◽  
Vol 12 (11) ◽  
pp. 4559 ◽  
Author(s):  
Joseph Phiri ◽  
Karel Malec ◽  
Socrates Kraido Majune ◽  
Seth Nana Kwame Appiah-Kubi ◽  
Zdeňka Gebeltová ◽  
...  
Keyword(s):  
Economic Growth ◽  
Food Processing ◽  
National Income ◽  
Commodity Prices ◽  
Economic Diversification ◽  
Speed Of Adjustment ◽  
Long Run ◽  
Short Run ◽  
The Impact

For several years, the Zambian economy relied on the mining sector, which has been affected by fluctuations in commodity prices. The new century enhanced the calls for economic diversification, with the agricultural, manufacturing, and services sectors amongst those pronounced. This article focused on the role of agriculture in supporting the economy, particularly, the effect of agriculture on economic growth. The data analyzed was reviewed for the period 1983–2017. The ARDL Bounds Test was applied in order to meet the said objectives. The ECM results suggest that agriculture, manufacturing, services, and mining converge to an equilibrium and affect economic growth at the speed of adjustment of 90.6%, with the effect from agriculture, mining, and services being significant. The impact of agriculture on economic growth was significant in both the short-run and long-run, with coefficient unit effects of 0.428 and 0.342, respectively. The effects are strong because more than two-thirds of the rural population rely on farming, and agriculture has stood as a catalyst for food security. For the effect of agriculture to be much more profound, farmers must be supported with adequate infrastructure, accessibility to markets, farming inputs, better irrigation techniques, which would address the problem of reliance on rain, all of which were inconsistent in the last decade. Additionally, governments must ensure the institutionalization of food processing industries which add more value to the national income.

scholarly journals The Impact of Military Expenditures on Economic Growth of Pakistan

2018 ◽  
Vol 5 (2) ◽  
pp. 41 ◽  
Author(s):  
Muhammad Ajmair ◽  
Khadim Hussain ◽  
Faisal Azeem Abbassi ◽  
Misbah Gohar
Keyword(s):  
Economic Growth ◽  
Time Series Data ◽  
Correction Term ◽  
Military Expenditure ◽  
Series Data ◽  
Gdp Growth ◽  
Long Run ◽  
Short Run ◽  
Military Expenditures ◽  
The Impact

The purpose of this research paper is to examine the long run relationship between military expenditure, number of persons in military and economic growth. To fulfill this, the study used ARDL approach for annual time series data from 1990 to 2015. The results show that Pakistan military expenditures are insignificant (military burden for the country is statically insignificant) and number of persons in military are positively and significantly related with GDP growth in long run. The error correction term is negative and significant which shows that short run relationship exists among economic growth, military expenditures and number of army persons. In short run military expenditure and number of persons in military are positively and significantly related with GDP growth but in long run only number of military persons affects economic growth positively and significantly.

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