scholarly journals Energy Efficiency and the Role of Financial Development, Trade Openness and Technological Innovation:  Exploring the Dynamic Linkages for Pakistan

2020 ◽  
Author(s):  
Samia Nasreen ◽  
Sofia Anwar
Keyword(s):  
Economic Growth ◽  
Energy Efficiency ◽  
Financial Development ◽  
Technological Innovation ◽  
Trade Openness ◽  
Directed Acyclic Graphs ◽  
Long Run ◽  
Svar Model ◽  
Cointegration Tests ◽  
Dynamic Linkages

Abstract The study explores the dynamic linkages among financial development, trade openness, technological innovation and energy efficiency in Pakistan utilizing cointegration tests, Directed Acyclic Graphs (DAG) and Structural Vector Autoregression (SVAR) model for the period 1980-2017. The results of Johansen cointegration show that variables ae cointegrated. The robustness of cointegration relationship is confirmed by applying Gregory-Hansen structural break cointegration. The empirical findings imply that financial development and technological innovation positively and significantly stimulate energy efficiency while trade openness and economic growth negatively and significantly impact on energy efficiency in long-run. The DAG results explain the evidence of causality from financial development, trade openness, technological innovation and economic growth to energy efficiency. The results of forecast error variance decomposition from SVAR model describe that technological innovation has greater impact on energy efficiency in short-term but its impact gradually decreases with the extension of forecast period. On contrary, the promotion effect of financial development and trade openness on energy efficiency increase gradually over time and become highest in long-run. This finding underlines the relevance of technological innovation and trade openness to policy makers in order to achieve energy efficiency in Pakistan.

How Do Urbanization and Urban Agglomeration Affect CO2 Emissions in South Asia? Testing Non-Linearity Puzzle with Dynamic STIRPAT Model

2020 ◽  
Vol 08 (01) ◽  
pp. 2050003
Author(s):  
Hongzhong FAN ◽  
Shujahat Haider HASHMI ◽  
Yasir HABIB ◽  
Minhaj ALI
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
South Asia ◽  
Financial Development ◽  
South Asian ◽  
Trade Openness ◽  
Urban Agglomeration ◽  
World Population ◽  
Long Run ◽  
Cointegration Tests

The issue of urbanization has gained much importance over the last few decades due to its significant influence on economic growth and environmental quality, especially in developing countries. The non-linearity puzzle has been a long-debated issue, and prior studies provide mixed evidence. This study addresses the issue of urbanization using the measure of urban agglomeration and investigates the non-linear relation between urbanization and CO2 emissions at the regional level. The South Asian region represents approximately one-fourth of the world population and its urbanization needs to be addressed properly. This paper uses the annual data over the period of 1974–2014 for four South Asian countries, namely, Pakistan, India, Bangladesh, and Nepal. The panel cointegration tests establish the long-run relation between urbanization, urban agglomeration, economic growth, trade openness, energy consumption, financial development, and CO2 emissions. The fully modified ordinary least squares (FMOLS) model further confirms the existence of Environmental Kuznets Curve (EKC) in South Asia. Moreover, urbanization has an inverted U-shaped relation with CO2 emissions, while urban agglomeration has a U-shaped nexus with CO2 emissions for overall sample. The bidirectional causal relationship has also been confirmed between urbanization and CO2 emissions, between urban agglomeration and CO2 emissions, between financial development and CO2 emissions both in the long-run and short-run. On the other hand, unidirectional causality runs from economic growth, trade openness, and energy consumption to CO2 emissions in the long-run. The rising trend of urban agglomeration in metropolitan cities in South Asia is adversely affecting the environment. The current study has implications for policymakers and respective governments to adhere to more stringent urban planning.

scholarly journals The Impact of Industrialization, Trade Openness, Financial Development, and Energy Consumption on Economic Growth in Indonesia

Economies ◽  
2021 ◽  
Vol 9 (4) ◽  
pp. 174
Author(s):  
Khalid Eltayeb Elfaki ◽  
Rossanto Dwi Handoyo ◽  
Kabiru Hannafi Ibrahim
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Least Squares ◽  
Financial Development ◽  
Correction Term ◽  
Trade Openness ◽  
Ordinary Least Squares ◽  
Distributed Lag ◽  
Long Run ◽  
The Impact

This study aimed to scrutinize the impact of financial development, energy consumption, industrialization, and trade openness on economic growth in Indonesia over the period 1984–2018. To do so, the study employed the autoregressive distributed lag (ARDL) model to estimate the long-run and short-run nexus among the variables. Furthermore, fully modified ordinary least squares (FMOLS), dynamic least squares (DOLS), and canonical cointegrating regression (CCR) were used for a more robust examination of the empirical findings. The result of cointegration confirms the presence of cointegration among the variables. Findings from the ARDL indicate that industrialization, energy consumption, and financial development (measured by domestic credit) positively influence economic growth in the long run. However, financial development (measured by money supply) and trade openness demonstrate a negative effect on economic growth. The positive nexus among industrialization, financial development, energy consumption, and economic growth explains that these variables were stimulating growth in Indonesia. The error correction term indicates a 68% annual adjustment from any deviation in the previous period’s long-run equilibrium economic growth. These findings provide a strong testimony that industrialization and financial development are key to sustained long-run economic growth in Indonesia.

scholarly journals Research of the synergetic Effects of the Impact of Innovative and Related Macroeconomic Factors on Economic Growth

2021 ◽  
Vol 25 (4) ◽  
pp. 98-109
Author(s):  
B. D. Matrizaev
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Technological Innovation ◽  
Positive Impact ◽  
Innovation Policy ◽  
Coordinated Development ◽  
Macroeconomic Factors ◽  
Long Run ◽  
Stable Growth ◽  
The Impact

This article examines the main mechanisms and tools for implementing innovation policy in countries with fastgrowing economies such as China and India. The study aims to explore the causal relationship between innovation, key macroeconomicvariables and economic growth.The author applies the entropy method and adapts the Graymodel to build a system of indices for assessing the coordination of the interaction of technological innovation, financial development and economic growth. The results show that the degree of integration of the financial system into innovation processes has a significant positive impact on the success of innovation, which is measured by patent activity. Our research proves that innovation indirectly affects economic growth through quality of life, infrastructure efficiency, employment, and rade openness. The findings of the research reveal that both economic growth and innovation tend to depend on a number of conjugate variables in the long run: capital, labor, etc. The author concludes that a comprehensive analysis of technological innovation, financial development and economic growth shows that the three-factor relationship has great potential for coordinated development, as a result of which, according to the calculated forecasts, economic growth in fast-growing economies will significantly accelerate its pace in the next five years. The subject of further research may be an analysis of whether the degree of conjugation of connectivity and coordination between the three systems will maintain stable growth at high values and whether they will be able to reach the stage of transformation.

scholarly journals Energy Intensity Determinants Based on Structure-oriented Cointegration by Embedding a Knowledge Box in a Time Series Model: Evidence From Iran

2021 ◽  
Author(s):  
Parisa Esmaeili ◽  
Meysam Rafei
Keyword(s):  
Financial Development ◽  
Energy Intensity ◽  
Trade Openness ◽  
Decomposition Analysis ◽  
Directed Acyclic Graphs ◽  
Impulse Response Functions ◽  
Government Investment ◽  
Long Run ◽  
Oil Revenues ◽  
The Impact

Abstract Energy intensity reduction is an exigent issue for Iran, where energy consumption is so high. Therefore, finding effective policies to reduce energy intensity is important. With this in mind, the impact of financial development, government investment, oil revenues, and trade openness on energy intensity is assessed in this study. We combined Structural Vector Error Correction Model (SVECM) and Directed Acyclic Graphs (DAG) technique to examine the relationships between study variables. The results of DAG prove that financial development, government investment, oil revenues, and trade openness influence the intensity of energy. Besides, the significant and long-run relationships among variables allowed us to apply SVECM. Impulse response functions and variance decomposition analysis indicate that government investment, oil revenues, and trade openness are negatively associated with the intensity of energy. Also, financial development positively influences energy intensity. Meanwhile, the impact of government investment is greater than oil revenues, trade openness, and financial development impacts. So, Government investment is the most effective policy regarding optimizing the consumption of energy and reducing energy intensity. We also advise policymakers to use oil revenues to increase government investment, enhancing the level of trade openness, and tax to the private sector to improve the level of energy intensity.

Financial development, FDI and economic growth: evidence from Sudan

2018 ◽  
Vol 45 (8) ◽  
pp. 1236-1249 ◽  
Author(s):  
Abdalla Sirag ◽  
Samira SidAhmed ◽  
Hamisu Sadi Ali
Keyword(s):  
Economic Growth ◽  
Least Squares ◽  
Financial Development ◽  
Unit Root ◽  
Structural Break ◽  
Ordinary Least Squares ◽  
Series Data ◽  
Content Type ◽  
Long Run ◽  
Cointegration Tests

Purpose The effect of foreign direct investment (FDI) on economic growth is widely believed to be contingent on the development of the financial sector. Nevertheless, as the possibility that the effect of financial development on growth being contingent on FDI has been neglected in existing literature, the authors have investigated it in this paper. In general, the purpose of this paper is to examine the effect of financial development and FDI on economic growth in Sudan using annual data from 1970 to 2014. Design/methodology/approach Since most of the macroeconomic variables are subject to unit root problem, the time series data are assessed using unit root and cointegration tests with/without structural break. Moreover, the study uses the fully modified ordinary least squares and the dynamic ordinary least squares techniques to estimate the long-run model. Findings The results of the cointegration tests provide evidence that a long-run relationship exists among variables even after accounting for the structural break. The results show that financial development and FDI are positive and significant in explaining economic growth in Sudan. Financial development is found to be more beneficial to economic growth than FDI. Moreover, the findings reveal that FDI leads to better economic performance through financial development. Interestingly, the findings of the study show that the effect of financial development on economic growth is further enhanced by the inflows of FDI. Research limitations/implications The government should focus on promoting FDI in more productive sectors. In addition, further cooperation with multinational enterprises is needed to increase FDI in the country. Originality/value This is the first paper that empirically examines both the interlinked impact of FDI on growth through financial development and the impact of financial development on economic growth through FDI in Sudan using appropriate econometric methods.

Trade Openness, Financial Development Index and Economic Growth

2014 ◽  
Vol 6 (4) ◽  
pp. 362-375 ◽  
Author(s):  
Dogga Satyanarayana Murthy ◽  
Suresh Kumar Patra ◽  
Amaresh Samantaraya
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Trade Openness ◽  
Output Growth ◽  
Domestic Demand ◽  
Policy Implications ◽  
Content Type ◽  
Development Index ◽  
Long Run ◽  
Financial Development Index

Purpose – The purpose of this article is to examine the inter-relationship and direction of causality among three macroeconomic variables such as trade liberalization, financial development and economic growth. Design/methodology/approach – The empirical analysis is based on the principal component analysis as method to construct financial development index (FDI), augmented Dickey–Fuller and Phillips–Perron tests as the unit root test, Johansen’s co-integration test and VECM for direction of causality in the long run among TOP, FDI and economic growth. Findings – The empirical results confirmed that there exists a long-run association among trade openness, financial development and economic growth. This study has also found that there is bidirectional causality between financial development and growth. However, the causality runs from growth to finance is stronger than that from finance to growth. This study also observed unidirectional causality that runs from financial development and economic growth to trade openness. Research limitations/implications – The policy implications that could be drawn from the present study is that, initiation of financial reforms to improve the size of financial system would lead to higher economic growth. Another key implication from this study is that because trade openness has no effect on both domestic financial sector development and output growth, it would be better to deploy the resources into creating a sustained domestic demand rather than concentrating more on the external front in general and trade openness in particular. Originality/value – The study constructs a summary IFD for India by taking into account four broad financial development indicators for the period 1971-2012. The present paper also suggests that it would be better to deploy the resources to create a sustained domestic demand rather than concentrating more on the external front in general and trade openness in particular.

scholarly journals Finance – Growth Nexus in Nigeria: Fragility and Development Effects

2016 ◽  
Vol 12 (7) ◽  
pp. 381
Author(s):  
Korede Ajogbeje
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Banking System ◽  
Unit Root Test ◽  
Exchange Rate Volatility ◽  
Financial Fragility ◽  
Long Run ◽  
Interest Rate Volatility ◽  
Cointegration Tests ◽  
Finance Growth Nexus

The study investigates the effects of financial fragility and financial development on economic growth in Nigeria between 1982 and 2012. The augumented dickey fuller (ADF) unit root test and the Johanson cointegration tests were respectively used to establish the stationarity and long run properties of the variables. The results show that financial development, proxy by credit to private sector as a percentage of GDP has a positive significant effects on output, as expected. As regards the fragility effects, the result revealed that the effect of financial volatility on economic growth is negative. Financial fragility was refined in the contexts of unsound banking system and unstable financial market, which were proxy by interest rate volatility and exchange rate volatility respectively, thus have negative significant effects on output. It is thus recommended that policy maker’s efforts aimed at increasing growth should work more on developing the financial sector and dampening the volatile nature of financial series. The pairwise granger causality result also reveals that there is a unidirectional causality running from financial fragility to gross capital formation.

scholarly journals The Dynamic Effects of Growth, Financial Development and Trade Openness on Tax Revenue in Malaysia

2020 ◽  
Vol 21 (1) ◽  
pp. 42-62
Author(s):  
Nanthakumar Loganathan ◽  
Norsiah Ahmad ◽  
Thirunaukarasu Subramaniam
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Trade Openness ◽  
Tax Revenue ◽  
Tax Collection ◽  
Empirical Results ◽  
Long Run ◽  
Rolling Window ◽  
Short Run ◽  
Sustainable Economic Growth

This study explores the effects of domestic financial development, growth and trade openness on tax collection for Malaysia using the ARDL and bootstrap rolling window estimates covering the period 1970-2017. The empirical results suggest that, the presence oflong-run relationship between tax revenue and per capita GDP and short-run relationship between tax collection, economic growth, financial development and trade openness. We foundthatthere is a short-run unidirectional causality running between tax collection, economic growth and financial development. This result suggests that, in the long-run, economic performance and financial development have an adverse effect on tax collection, while trade openness has no significant causality impact on tax collection in Malaysia. Based on the empirical results of the study, the country should pay more attention to enhance the effectiveness of future public expenditure programs and put more emphasisson dynamic fiscal policy targeting on tax reform and securing new sourcesof tax revenues to ensure continuous flow of long-term tax revenue coupled with sustainable economic growth, trade and financial performances in up-coming years.

scholarly journals Relationship between Financial Development and Economic Growth: Empirical Evidence in Indonesia

2018 ◽  
Vol 10 (12) ◽  
pp. 37 ◽  
Author(s):  
Hafnida Hasan
Keyword(s):  
Economic Growth ◽  
Empirical Evidence ◽  
Granger Causality ◽  
Financial Development ◽  
Trade Openness ◽  
Government Expenditure ◽  
Long Run ◽  
Push Forward ◽  
Using Data ◽  
The Relationship

The aim of this paper to examine the relationship between financial development and economic growth in Indonesia by using data from 1986 until 2014. Johansen co-integration and Granger causality are utilized to analyze the data. The financial development is measured by the ratio of broad money and other control variables such as trade openness and government expenditure. The finding indicates that there is long run relationship between financial development and economic growth. Meanwhile, a unidirectional relationship had been found, it come from economic growth to financial development. Therefore, a policy to increase economic growth will push forward in proper to improve financial development in Indonesia.

Interaction Between Energy Consumption and Economic Growth: Empirical Evidence from Pakistan

2020 ◽  
Vol 8 (2) ◽  
pp. 64-83
Author(s):  
Oshin Khan ◽  
◽  
Muhammad Younas ◽  
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Financial Development ◽  
Positive Impact ◽  
Trade Openness ◽  
Negative Influence ◽  
Substantial Part ◽  
Services Sector ◽  
Long Run ◽  
Negative Effect

Energy arguably plays a substantial part in the economic growth process. Henceforth, a bulk of studies have endeavored to examine the linkages between energy consumption and economic growth; however, no consensus emerged. Current study is an attempt to explore the long run ties for energy consumption and energy intensity with economic growth, urbanization, trade openness, and financial development by employing ARDL cointegration in case of Pakistan for the period of 1985 to 2017. Results postulate that trade openness has a positive impact on energy consumption, while urbanization and financial development have a negative influence. As far as sectoral analysis is concerned, agriculture and manufacturing share has a positive impression on energy while the services sector has a negative effect.

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