Mexico’s Finance-Growth Nexus with Trade Openness, FDI and Portfolio Investment: Evidence from VECM Cointegration Analysis

This study investigates Mexico’s finance-growth nexus by controlling the “globalization” variables of trade openness, foreign direct investment (FDI) and portfolio investment together with the structural break dummy. Financial development is proxied by two indicators of size and efficiency. Implementing the cointegration and Granger causality tests in the framework of the vector error correction model (VECM), we found that: financial size is negative for economic growth with no feedback; financial efficiency and economic growth are in a negative bilateral relationship; trade openness and portfolio investment are positive for economic growth; and FDI is negative for economic growth and financial efficiency.

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India’s Finance-Growth Nexus: Cointegration and Causality Analysis with Income Inequality and Globalization

Applied Economics and Finance ◽

10.11114/aef.v5i6.3502 ◽

2018 ◽

Vol 5 (6) ◽

pp. 12

Author(s):

Takashi Fukuda

Keyword(s):

Economic Growth ◽

Income Inequality ◽

Financial Development ◽

Negative Impact ◽

Structural Break ◽

Trade Openness ◽

Cointegration Analysis ◽

Causality Analysis ◽

Causality Tests ◽

Finance Growth Nexus

This paper investigates India’s finance-growth nexus―the relationship between financial development and economic growth―taking the weakly exogenous variables of income inequality, trade openness and financial openness together with the structural break dummy into the cointegration analysis of the vector error correction model. Implementing the Granger causality tests we have detected that both financial size and financial efficiency exhibit a negative impact on economic growth with no feedback from the latter to each of the former. It is important for policy makers to recognize that finance does not always promote economic growth, considering how to convert the effect of financial development from “growth-retarding” to “growth-enhancing”.

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The effect Foreign Portfolio Investment on Economic Growth in Nigeria

South Asian Journal of Social Studies and Economics ◽

10.9734/sajsse/2021/v11i330288 ◽

2021 ◽

pp. 43-53

Author(s):

M. O. Ndugbu ◽

K. C. Otiwu ◽

L. N. Uzowuru

Keyword(s):

Economic Growth ◽

Trade Openness ◽

Portfolio Investment ◽

Policy Makers ◽

Correction Model ◽

Foreign Portfolio Investment ◽

Vector Error Correction ◽

Market Capitalization ◽

Vector Error ◽

The Relationship

This study examined the relationship between foreign portfolio investment and economic growth in Nigeria between the periods 1986 to 2017. The study employed the Vector Error Correction model (ECM) and granger causality. Market capitalization, foreign portfolio investment and trade openness were the independent variables while gross domestic product is proxy for economic growth in Nigeria. Findings revealed that of the three study variables, trade openness and market capitalization proved to be significant in promoting economic growth in Nigeria while foreign portfolio investment is negative and insignificant. As such, we recommend that policy makers should endeavour to boost the capital market activities so as to foster capital transactions and subsequently increase economic performance and growth in the nation.

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Financial Development and Economic Growth: The Case of Greek Economy

International Journal of Accounting and Finance Studies ◽

10.22158/ijafs.v1n2p173 ◽

2018 ◽

Vol 1 (2) ◽

pp. 173

Author(s):

Pavlos Stamatiou ◽

Nikolaos Dritsakis

Keyword(s):

Economic Growth ◽

Granger Causality ◽

Financial Development ◽

Trade Openness ◽

Cointegration Analysis ◽

Development Economic ◽

Causality Tests ◽

Greek Economy ◽

Causal Impact ◽

Using Data

This paper examines the relationship among financial development and economic growth, within a framework which also accounts trade openness, for the case of Greece using data covering the period 2001-2017. We investigate this relationship using the Johansen and Juselius (1990) cointegration approach and the Vector Error Correction Models (VECM), employing Granger causality technique, in order to explore the presence of causality among the variables. The results of cointegration analysis suggested that there is one cointegrated vector among the functions of financial development, economic growth and trade openness. Granger causality tests have shown that there are unidirectional causalities running from economic growth to financial development as well as from financial development to trade openness. The results support that financial development and trade openness do not have causal impact on economic growth in Greece, for the aforementioned period. On the other hand, economic growth has a causal impact on trade both directly and indirectly through financial development.

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Dynamics of Economic Growth, Investment and Trade Openness: Evidence from Bangladesh

South Asian Journal of Macroeconomics and Public Finance ◽

10.1177/2277978717695150 ◽

2017 ◽

Vol 6 (1) ◽

pp. 82-104 ◽

Cited By ~ 3

Author(s):

Champa Bati Dutta ◽

Mohammed Ziaul Haider ◽

Debasish Kumar Das

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Granger Causality ◽

Direct Investment ◽

Trade Openness ◽

Jel Classification ◽

Domestic Investment ◽

Causality Test ◽

Vector Error Correction ◽

Causality Tests

This article investigates the causal relationship among foreign direct investment, domestic investment, trade openness and economic growth in Bangladesh over the period 1976–2014. Unit root tests, cointegration methods and Granger causality tests in Vector Error Correction Model (VECM) framework are used to investigate the relationships. The results of Granger causality test based on a stable VECM support a unidirectional causality running from foreign direct investment to growth, domestic investment to trade openness, growth to trade openness and bidirectional causality between domestic investment and growth and foreign direct investment and domestic investment. The results support the investment complementarities in Bangladesh. JEL Classification: E22, F1, O40

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Malaysia’s Energy-Growth Nexus and Environmental Kuznets Curve Hypothesis: Empirical Analysis Using the VECM and ARDL Cointegration Techniques

Journal of Asian Development ◽

10.52941/jad.v8i1.22 ◽

2021 ◽

Vol 8 (1) ◽

pp. 1-27

Author(s):

Takashi Fukuda

Keyword(s):

Economic Growth ◽

Co2 Emissions ◽

Environmental Kuznets Curve ◽

Structural Break ◽

Trade Openness ◽

Kuznets Curve ◽

Ekc Hypothesis ◽

Energy Growth ◽

Distributed Lag ◽

Causality Tests

This paper investigated Malaysia’s energy-growth nexus and environmental Kuznets curve (EKC) hypothesis over the period 1971-2014 by taking the globalization variables of trade openness and foreign direct investment (FDI) and the structural break dummy of the Asian financial crisis of 1997 into estimation. To give interference, the Granger causality tests were implemented in the framework of two cointegration techniques: vector error correction model (VECM) and autoregressive distributed lag (ARDL). As per Malaysia’s energy-growth nexus, referring to different results of the two approaches, we concluded that the presence of the energy-growth nexus was statistically confirmed, but it has not been fully established yet in the country. On the other hand, both the VECM and ARDL results provided the same conclusion for Malaysia’s EKC hypothesis, that is, in the initial stage, as the higher economic growth, the less CO2 emissions, but after a threshold, the higher economic growth, the more CO2 emissions.

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Exchange Rates And Equity Markets: Evidence From Some European Countries

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v26i6.328 ◽

2010 ◽

Vol 26 (6) ◽

Author(s):

Oana Ariana Batori ◽

Dimitrios Tsoukalas ◽

Paolo Miranda

Keyword(s):

Stock Market ◽

Exchange Rates ◽

Cointegration Analysis ◽

Integrated System ◽

Vector Autoregressive ◽

Vector Error Correction ◽

Vector Error ◽

Daily Data ◽

Causality Tests ◽

Market Indexes

This paper employs cointegration analysis, vector error correction and vector autoregressive modeling along with Granger causality tests to examine the effect of exchange rates on the stock market indexes for a group of  European Union countries using daily data from 1999-2009.  The results suggest that the transmitting mechanism for the influence of the exchange rate in the stock market is foreign investment.  Evidence also highlights that there is no clear causality from stock market to exchange rates, or vice versa, for the direction of the causation, suggesting that exchange rates and stock markets operate as an integrated system continuously influencing each other.

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Islamic stock market and sukuk market development, economic growth, and trade openness (the case of Indonesia and Malaysia)

Verslas teorija ir praktika ◽

10.3846/btp.2019.19 ◽

2019 ◽

Vol 20 ◽

pp. 196-207 ◽

Cited By ~ 1

Author(s):

Harjum Muharam ◽

Resi Junita Anwar ◽

Robiyanto Robiyanto

Keyword(s):

Economic Growth ◽

Stock Market ◽

Trade Openness ◽

Market Development ◽

Development Economic ◽

Causality Test ◽

Vector Error Correction ◽

Vector Error ◽

Auto Regressive ◽

Positive Effect

This study was conducted in order to analyse the two-way relationship between the Islamic stock market and sukuk market development, and economic growth. this study also analyses whether trade openness influences the development of the Islamic stock market and sukuk market, and economic growth. VAR (Vector Auto Regressive), VECM (Vector Error Correction Model), and a Granger Causality Test used to test the hypothesis. Using Indonesia and Malaysia as the sample countries and from February 2008 to December 2017 period, the results showed that there is a bi-directional causality between the development of the Islamic stock market and the development of the sukuk market in Indonesia and Malaysia. There is a bi-directional causality between the development of the Islamic stock market and sukuk market with economic growth in Indonesia. Unidirectional causality is found between economic growth and the sukuk market development in Malaysia. And no causality (neutrality) is reported between the development of the Islamic stock market and economic growth in Malaysia. Meanwhile, trade openness has a significant and positive effect on the sukuk market development as well as economic growth in Malaysia. For the limitations, this research only focused on two countries and only delved into the corporation sukuk market.

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The Relationship between Financial Sector Development and Economic Growth in Nigeria: Cointegration with Structural Break Approach

International Journal of Engineering and Advanced Technology - Regular Issue ◽

10.35940/ijeat.e1153.0585c19 ◽

2019 ◽

Vol 8 (5C) ◽

pp. 1081-1088

Keyword(s):

Economic Growth ◽

Error Correction ◽

Financial Development ◽

Structural Break ◽

Financial Sector ◽

Vector Error Correction Model ◽

Correction Model ◽

Vector Error Correction ◽

Financial Sector Development ◽

Vector Error

This research investigates the relationships between the financial sector development and economic growth in Nigeria, using annual time series data for the period between 1981 to 2015. This research examines the long-run relationship between the financial sector development and the economic growth in Nigeria, and applies the Gregory and Hansen (1996a, b) cointegration approach with one endogenously determined structural break and the vector error correction model. This research finds out that, there exist cointegration among the financial development, trade openness and economic growth with structural break date in 2010 and the results from the vector error correction model finds there is significant and negative relationship between financial development and the economic growth in Nigeria in the study period. In addition, the findings of this study indicate that accounting for structural break in VECM improves the significance and thus reliability of the model applied. The estimated model is found to have passed diagnostic tests and is found to be stable. The paper recommends that to achieve the desired economic growth level financial development should be supported with other proactive measures such as sound institution and basic infrastructure to complement the effort of financial sector reforms. Moreover, future analysis should always consider the structural breaks while conducting macroeconomic empirical analysis as it helps in avoiding having spurious results

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Information Technology, Economic Growth, And Employment: Evidence From Time-Series Analyses

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v23i1.1409 ◽

2011 ◽

Vol 23 (1) ◽

Cited By ~ 1

Author(s):

Doh-Khul Kim

Keyword(s):

Economic Growth ◽

Information Technology ◽

Time Series ◽

Cointegration Analysis ◽

Vector Error Correction ◽

Vector Error ◽

Long Run ◽

Time Series Analyses ◽

Role Of It ◽

The U.S

Since the mid-1990s, numerous studies have shown the interactions between developments in Information Technology (IT) or the number of Internet subscribers and the general economy such as economic growth. Some show that development in IT has significantly affected growth, led by higher productivity, whereas others show no significant role of IT in the growth. Thus, no general consensus has been reached on the effects of IT development on economic (GDP) growth. By applying two popular time-series statistical tools (multivariate cointegration analysis and vector error correction model) with the total number of Internet subscribers in the U.S., this paper finds: (1) there is a long-run equilibrium linkage among the development of IT (subscriber numbers), economic growth, and employment; and (2) there are bi-directional Granger-causality relationships present between IT and economic growth, whereas there exists a uni-directional relationship between IT and employment in the U.S.

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Impact of Economic Growth, Financial Development, and Trade Openness on Environmental Degradation in Egypt

Polytechnic Journal ◽

10.25156/ptj.v10n1y2020.pp98-102 ◽

2020 ◽

Vol 10 (1) ◽

pp. 98-102

Author(s):

Farman M. Ahmed ◽

Dlawar M. Hadi ◽

Aso K. Ahmed

Keyword(s):

Economic Growth ◽

Co2 Emissions ◽

Financial Development ◽

Trade Openness ◽

Negative Influence ◽

Vector Error Correction ◽

Vector Error ◽

Long Run ◽

Short Run ◽

Difference Form

This paper examines the effects of economic growth, financial development, and trade openness on the environment quality measured by CO2 emissions over the period of 1965–2014 in the case of Egypt. In this study, the series were stationary at their first difference form, and thus, a long-run model was adopted using the vector error correction model technique. The results confirm that the variables are cointegrated, indicating the long-run relationship between the variables. The empirical findings reveal a negative influence of economic growth and financial effect of the previous period of CO2 emissions, these effects are not significant in the short run. Any deviations from the long-run equilibrium return quickly, representing 59% speed of adjustment. The study proposes new policy insights into reduce CO2 emissions, especially in the long run.

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