scholarly journals The Impact of FDI on the Economic Growth of Sri Lanka: An ARDL Approach to Co-integration

2017 ◽  
Vol 3 (1) ◽  
pp. 70-82 ◽  
Author(s):  
Samantha NPG ◽  
Liu Haiyun
Keyword(s):  
Economic Growth ◽  
Sri Lanka ◽  
Manufacturing Sector ◽  
Economic Policies ◽  
Policy Reforms ◽  
Long Run ◽  
Greenfield Investments ◽  
Ardl Approach ◽  
Short Run ◽  
The Impact

The impact of foreign direct investment(FDI) on host country economic growth is a debatable issue in the recent economic literature. The purpose of this study is to examine this issue for a country which practiced comparatively more liberal economic policies within the South Asian region over four decades. The ARDL approach to cointegration is applied to identify long-run relationship and short-run dynamics between selected variables for the period of 1978 to 2015 for Sri Lanka. The empirical result confirms the long run relationship between the variables. FDI is positively correlated with economic growth in the short run and long run, but it is not a significant factor for economic growth in Sri Lanka. Sri Lanka will have to undertake policy reforms related to FDI in order to attract more greenfield investments to boost economic growth creating new job opportunities and expanding exports in the manufacturing sector. These findings would be an example for other small open economies with similar economic characteristics.

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.

SHORT-RUN AND LONG-RUN IMPACT OF INFLATION, UNEMPLOYMENT, AND ECONOMIC GROWTH TOWARDS POVERTY IN INDONESIA: ARDL APPROACH

2019 ◽  
Vol 2 (1) ◽  
pp. 15
Author(s):  
Ahmadi Murjani
Keyword(s):  
Economic Growth ◽  
Poverty Alleviation ◽  
Macroeconomic Variables ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Ardl Approach ◽  
Short Run ◽  
The Government ◽  
The Impact

 Poverty alleviation has become a vigorous program in the world in recent decades. In line with the efforts applied by the government in various countries to reduce poverty, some evaluations have been practised. The impacts of macroeconomic variables such as inflation, unemployment, and economic growth have been commonly employed to be assessed for their impact on the poverty. Previous studies in Indonesia yielded mix results regarding the impact of such macroeconomic variables on the poverty. Different methods and time reference issue were the suspected causes. This paper aims to overcome such problem by utilising the Autoregressive Distributed Lag (ARDL) equipped with the latest time of observations. This paper finds in the long-run, inflation, unemployment, and economic growth significantly influence the poverty. In the short-run, only inflation and economic growth are noted affecting poverty significantly. 

scholarly journals Examining the impact of Exports and Exchange rate on Economic Growth of Turkey

2020 ◽  
Author(s):  
Iftikhar Muhammad ◽  
Malik Shahzad Shabbir
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Granger Causality ◽  
Direct Investment ◽  
Economic Policies ◽  
Long Run ◽  
Short Run ◽  
Auto Regressive ◽  
The Impact

Abstract Purpose This study intends to analyze the long-run and short-run relationships along with the identification of causal links between exports, economic growth, and exchange rate in Turkey. Data/Design: This study uses auto-regressive distributed lags (ARDL) and Granger causality over time series monthly data from the year 2010–2018. The results indicate that exports are significantly positively related to economic growth while the exchange rate is found to be negatively related to economic growth. Findings: Moreover, findings from the test of Granger causality indicate that a unidirectional causal association is found from exports to foreign direct investment and economic growth and from economic growth to foreign direct investment. The Granger causality results indicate that an increase in exports accelerates the economic growth of Turkey and a change in growth rate and exchange rate leads to a change in foreign direct investment. Originality of work: The overall findings suggest that exports should be promoted along with the liberal-investment economic policies to boost the overall economic growth in Turkey.

scholarly journals Liquidity commonality-economic cycle nexus in emerging Asian economies: An ARDL approach

2021 ◽  
Vol 8 (6) ◽  
pp. 26-39
Author(s):  
Syeda Hina Zaidi ◽  
Keyword(s):  
Economic Growth ◽  
Positive Impact ◽  
Policy Coordination ◽  
Market Liquidity ◽  
Economic Cycle ◽  
Long Run ◽  
Ardl Approach ◽  
Asian Economies ◽  
Short Run ◽  
The Impact

This study investigates the impact of liquidity commonality on the economic cycle for 7 emerging Asian economies over a period of 1997-2018, using Autoregressive Regressive Distributed Lag (ARDL) approach to Cointegration. Gross domestic investment, total consumption expenditure, net trade, and unemployment rate are studied as macro variables in the analysis. The nexus has been discussed both in the short-run and long-run. A significant relationship between economic growth and stock market liquidity commonality is found for large economies including China, India, Indonesia, and Malaysia; however, we found mixed evidence regarding the direction of the relationship for different economies. The aggregate analysis revealed that liquidity commonality has a positive impact on economic growth in the short-run and a negative association in the long-run. As a non-diversifiable risk factor, liquidity co-movement shocks spread the market wide and disrupt the overall functioning of financial markets and eventually affect the economy. For regulators and policymakers and particularly for those in emerging economies, understanding the factors affecting economic cycles and recognizing their dynamics and magnitude is important for policy coordination and market development. Further, the firms in Asian markets operate in legal and regulatory environments distinct from those of firms analyzed in the previous literature. A major knowledge gap pertaining to Asian emerging markets serves as the primary motivation for this study.

scholarly journals Economic Development, CO2 Emissions and Energy Use Nexus-Evidence from the Danube Region Countries

Energies ◽  
2021 ◽  
Vol 14 (11) ◽  
pp. 3165
Author(s):  
Eva Litavcová ◽  
Jana Chovancová
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Co2 Emissions ◽  
Carbon Emissions ◽  
Bounds Testing ◽  
Mutual Cooperation ◽  
Long Run ◽  
Short Run ◽  
Danube Region ◽  
The Impact

The aim of this study is to examine the empirical cointegration, long-run and short-run dynamics and causal relationships between carbon emissions, energy consumption and economic growth in 14 Danube region countries over the period of 1990–2019. The autoregressive distributed lag (ARDL) bounds testing methodology was applied for each of the examined variables as a dependent variable. Limited by the length of the time series, we excluded two countries from the analysis and obtained valid results for the others for 26 of 36 ARDL models. The ARDL bounds reliably confirmed long-run cointegration between carbon emissions, energy consumption and economic growth in Austria, Czechia, Slovakia, and Slovenia. Economic growth and energy consumption have a significant impact on carbon emissions in the long-run in all of these four countries; in the short-run, the impact of economic growth is significant in Austria. Likewise, when examining cointegration between energy consumption, carbon emissions, and economic growth in the short-run, a significant contribution of CO2 emissions on energy consumptions for seven countries was found as a result of nine valid models. The results contribute to the information base essential for making responsible and informed decisions by policymakers and other stakeholders in individual countries. Moreover, they can serve as a platform for mutual cooperation and cohesion among countries in this region.

Does Public Debt Service Expenditure Crowd-Out Economic Growth? Empirical Evidence from an African Developing Country

2019 ◽  
Vol 64 (3) ◽  
pp. 23-38
Author(s):  
Talknice Saungweme ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Time Series Data ◽  
Policy Formulation ◽  
Debt Service ◽  
Series Data ◽  
Long Run ◽  
Short Run ◽  
The Impact

Abstract This paper contributes to the ongoing debate on the impact of public debt service on economic growth; and it provides an evidence-based approach to public policy formulation in Zimbabwe. The empirical analysis was performed by applying the autoregressive distributed lag (ARDL) technique to annual time-series data from 1970 to 2017. The study findings reveal that the impact of public debt service on economic growth in Zimbabwe is negative in the short run but positive in the long run. The results are suggestive of the existence of a crowding-out effect of public debt service in Zimbabwe in the short run and a crowding-in effect in the long run. In view of these findings, the government should consider fiscal and financial policies that promote a constant supply of long-term finance, long-term fixed investments, and extension of a government securities maturity structure so as to ensure sustainable short- and long-term public debt service expenditures. The study further recommends the strengthening of non-distortionary revenue mobilisation reforms to reduce market distortions and boost domestic investment.

scholarly journals Impact of Exchange Rate Management on the Nigerian Economic Growth: Empirical Validation

2019 ◽  
Vol 1 (2) ◽  
pp. 28-35
Author(s):  
Friday Osaru Ovenseri Ogbomo ◽  
Precious Imuwahen Ajoonu
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Inflation Rate ◽  
Government Expenditure ◽  
Least Square ◽  
Ordinary Least Square ◽  
Exchange Rate Management ◽  
Long Run ◽  
Short Run ◽  
The Impact

This paper examined the impact of Exchange Rate Management on economic growth in Nigeria between 1980 and 2015. The study was set to gauge how the management of exchange rate in Nigeria has impacted the economy. The study employed the Ordinary Least Square (OLS) method in its analysis. Co-integration and Error Correction Techniques were used to establish the Short-run and Long-run relationships between economic growth and other relevant economic indicators. The result revealed that exchange rate management proxy by various exchange rates regimes in Nigeria was not germane to economic growth. Rather, government expenditure, inflation rate, money supply and foreign direct investment significantly impact on economic growth in Nigeria. It is against this backdrop that the Nigerian economy must diversify her export base to create room for more inflow of foreign exchange.  

scholarly journals Political Stability and its Impact on Economic Growth of Pakistan (1988-2018): A Time Series Analysis

2020 ◽  
Vol 6 (1) ◽  
pp. 273-282
Author(s):  
Majid Hussain Phul ◽  
Muhammad Saleem Rahpoto ◽  
Ghulam Muhammad Mangnejo
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Time Series Data ◽  
Political Stability ◽  
Series Data ◽  
Explanatory Variables ◽  
Long Run ◽  
Short Run ◽  
The Impact ◽  
Positive Effect

This research paper empirically investigates the outcome of Political stability on economic growth (EG) of Pakistan for the period of 1988 to 2018. Political stability (PS), gross fixed capital formation (GFCF), total labor force (TLF) and Inflation (INF) are important explanatory variables. Whereas for model selection GDPr is used as the dependent variable. To check the stationary of time series data Augmented Dickey Fuller (ADF) unit root (UR) test has been used,  and whereas to find out the long run relationship among variables, OLS method has been used. The analysis the impact of PS on EG (EG) in the short run, VAR model has been used. The outcomes show that all the variables (PS, GFCF, TLF and INF) have a significantly positive effect on the EG of Pakistan in the long run period. But the effect of PS on GDP is smaller. Further, in this research we are trying to see the short run relationship between GDP and other explanatory variables. The outcomes show that PS does not have such effect on GDP in the short run analysis. While GFCF, TLF and INF have significantly positive effect on GDP of Pakistan in the short run period.

scholarly journals HIGHER EDUCATION AND ECONOMIC GROWTH A CASE STUDY OF PAKISTAN

2010 ◽  
Vol 27 (1) ◽  
Author(s):  
Tariq Mahmood
Keyword(s):  
Higher Education ◽  
Economic Growth ◽  
Positive Impact ◽  
Public Expenditures ◽  
Annual Data ◽  
Unequal Distribution ◽  
Long Run ◽  
Short Run ◽  
The Impact ◽  
Education And Economic Growth

This paper highlights the role of higher education for the economic growth inPakistan. We explore the impact of increase in enrolment at tertiary level on thegrowth rate of income per worker. Estimating a growth model developed byMankiv et. al. (1992), using the annual data of Pakistan, we find a robustrelationship between higher education and economic growth in the long run. Themodel has also shown that investment in fixed capital has positive impact oneconomic uplift. Applying Johansen’s cointegration test, we show that the longrun elasticity of income with respect to capital stock is different from its share inGDP, and increase in the enrolment per unit of effective worker helps inbolstering economic growth. But, like earlier literature we also find statisticallyinsignificant relationship between higher education and GDP per worker. Thereare some fundamental reasons concerning to the ambiguous impact of investingin human capital on economic growth, particularly in the short run in case ofPakistan. First, the sharp increase in enrollment, recently, has been damaging thequality of education. Second, the unequal distribution of educational services hasheld back the efficiency of public expenditures, particularly before the reformsundertaken by higher education commission. Third, the low private return ofeducation has limited the demand for higher education in Pakistan for almost fiftyyears.

scholarly journals Are some taxes better for growth in Pakistan? A time series analysis

2018 ◽  
Vol 45 (10) ◽  
pp. 1439-1452 ◽  
Author(s):  
Kashif Munir ◽  
Maryam Sultan
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
International Trade ◽  
Sales Tax ◽  
Tax Base ◽  
Content Type ◽  
Long Run ◽  
Indirect Taxes ◽  
Short Run ◽  
The Impact

Purpose The purpose of this paper is to analyze the impact of taxes on economic growth in the long run as well as in the short run. Design/methodology/approach The study uses simple time series model, where real GDP is dependent variable and different forms of taxes are explanatory variables under ARDL framework from 1976 to 2014 at annual frequency for Pakistan. Findings Direct taxes have positive relation with economic growth in the long run. Sales tax, tax on international trade (tariffs) and other indirect taxes have positive impact on economic growth of Pakistan in the long run as well as in the short run. However, sales tax and other indirect taxes impact negatively on economic growth in the short run after one year because people realize decline in their real income. Practical implications Government should increase direct taxes by increasing tax base. Indirect taxes usually indicate negative impact after one and two years; therefore, government should decrease its reliance on indirect taxes. Government should promote tax awareness among the people which increase the tax morale of people and increase the tax base. Originality/value Taxes are disaggregated into direct and indirect taxes, while indirect taxes have been further disaggregated into excise duty, sales tax, surcharges, tax on international trade and other indirect taxes. This study provides useful insight for policy makers in designing taxes and their effect on growth.

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