scholarly journals Public debt and inflation dynamics: Empirical evidence from Zimbabwe

2021 ◽  
Vol 7 (2) ◽  
pp. 14-30
Author(s):  
Talknice Saungweme ◽  
Nicholas M. Odhiambo
Keyword(s):  
Public Debt ◽  
Structural Breaks ◽  
Testing Procedure ◽  
Bounds Testing ◽  
Inflation Dynamics ◽  
Monetary Policies ◽  
Distributed Lag ◽  
Long Run ◽  
Debt Dynamics ◽  
The Government

Abstract The study seeks to empirically test the hypothesis that public debt has a significant influence on inflation in Zimbabwe, covering the period 1980-2020. The study was motivated by recent trends in public debt and domestic inflation in Zimbabwe, and the need to guide debt-inflation related policy. These latest trends have started to ring alarming bells, which raises questions on the effectiveness of fiscal and monetary policies in bringing macroeconomic stability in the country. Applying the Autoregressive Distributed Lag (ARDL) bounds testing procedure to cointegration and an error correction mechanism (ECM), expanded by incorporating structural breaks, the study finds evidence in support of positive and significant impact of public debt on inflation dynamics in Zimbabwe, particularly in the long run. Based on the findings, public debt dynamics matter for inflation process in Zimbabwe. That is, fiscal policy can be considered to be an important determinant of the effectiveness of monetary policy in Zimbabwe. Therefore, the government should be mindful of increases in public debt as this was found to be inflationary.

Tax revenue and economic growth in developing country: an autoregressive distribution lags approach

2020 ◽  
Vol 7 (54) ◽  
pp. 205-217
Author(s):  
Mnaku Honest Maganya
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Testing Procedure ◽  
Gdp Growth ◽  
Bounds Testing ◽  
Causality Test ◽  
Significance Level ◽  
Distributed Lag ◽  
Distributed Lag Model ◽  
The Government

AbstractTanzania, like most other developing countries, faces numerous economic challenges in striving to achieve sustainable economic growth and development through taxation. In the literature, the debate on how effective taxes are as a tool for promoting economic growth and economic development remains inconclusive, as various research have reported mixed effects of tax on economic growth. This article investigates the effect of taxation on economic growth in Tanzania using the recently developed technique of autoregressive distributed lag model (ARDL) bounds testing procedure for the period from 1996 to 2019. Various preliminary tests were conducted including stationary tests as well as the pair-wise Granger causality test. According to the results obtained, domestic goods and services (TGS) taxes are positively related to GDP growth and are statistically significant at 1% level. Income taxes, on the other hand, were found to be negatively related to GDP growth and to be statistically significant at 5% level. The pair-wise Granger causality results indicated that there is bidirectional Granger causality between TGS and GDP growth at 1 % significance level. The government should aim at growing, nurturing and sustaining tax base to positively drive economic growth even further.

scholarly journals Modelling the Temporal Effect of Terrorism on Tourism in Kenya

2016 ◽  
Vol 8 (12) ◽  
pp. 10 ◽  
Author(s):  
Brian K. Masinde ◽  
Steven Buigut ◽  
Joseph K. Mung'atu
Keyword(s):  
Testing Procedure ◽  
Tourism Industry ◽  
Bounds Testing ◽  
Causality Test ◽  
Vector Error Correction ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
Long Run Equilibrium

<p>Terrorist attacks have escalated over the recent years in Kenya, with adverse effects on the tourism industry. This study aims to establish if a long-run equilibrium exists between terrorism and tourism in Kenya between the years 1994 and 2014. To reinforce the robustness of the results, both Autoregressive Distributed Lag (ARDL) bounds testing and the Vector Error Correction Model (VECM) techniques are used to investigate the problem. A Granger causality test is also carried out to ascertain the direction of the relationship if one exists. The evidence from ARDL and the VECM testing procedure suggest that there is no long-run equilibrium between terrorism and tourism in Kenya. Terrorism does not Granger cause tourism and vice versa. However, short-run effect indicates that terrorism negatively and significantly affects tourism.</p>

scholarly journals The Dynamics between External Public Debt and Foreign Exchange Reserve of Ethiopia Economy: 1981 to 2019

2021 ◽  
Vol 23 (11) ◽  
pp. 791-824
Author(s):  
Solomon Kebede Menza ◽  
◽  
Zerihun Getachew ◽  
Berhanu Kuma ◽  
Tora Abebe ◽  
...  
Keyword(s):  
Foreign Exchange ◽  
Public Debt ◽  
Service Sector ◽  
Tariff Rate ◽  
Foreign Exchange Reserve ◽  
Distributed Lag ◽  
Distributed Lag Model ◽  
Long Run ◽  
Short Run ◽  
The Government

This paper empirically examined the short-run and long-run dynamics among external public debt and foreign exchange reserve of Ethiopia. The two variables are playing a pivotal role in the growth and development of nations economy. To achieve the objective the study took 39 years data from the year 1981 to 2019 from National bank of Ethiopia and World Bank data sets. The study used descriptive analysis and empirical methods of analysis. The Autoregressive Distributed Lag model with error correction models were employed after checking the possible assumptions of our economic series. The results of ADF test statistics confirms our economic series are stationary at level and first difference forms. Bounds co-integration test suggests one co-integrating relationship between the variables taking foreign exchange reserve as the outcome variable. According to the descriptive method of analysis, on average, in Ethiopia the trend for service sector indicated that an ever improvement of the sector throughout the periods and supplementing the notion of change from agriculture base to service sector. In addition, the trade tariff rate of Ethiopian economy is indicating a downward movement and this in turn justifies the relative openness of the economy to the globe. In the same manner the financial development indicator of the nation is rising, which assures relative improvement in the financial sector. On the other hand, according to the Autoregressive Distributed Lag model in the short -run average trade tariff rate, share of manufacturing sector from the GDP, and lagged value of EPD itself predicts the external public debt significant at least at less than 10 percent level of significance. Moreover, the error correction model revealed that in the long-run, financial development indicator, debt service payment, and average trade tariff rate were predicting the stock of foreign exchange reserve for Ethiopian economy. The result also indicates that in the short-run, only the share of agriculture and service sectors are significantly predicting the variations of the stock of foreign exchange reserve, ceteris paribus. Finally, the concerned body specially the government of Ethiopia should limit or reduce the amount of external debt inflows that has an adverse effect on debt service payment, and recheck the budget sources for financing different projects especially manufacturing industries rather than highly basing on external sources in the form of external public debt . More importantly, the government should enhance the value of export potential, among others.

scholarly journals Causality Between Public Debt, Public Debt Service and Economic Growth in an Emerging Economy

2020 ◽  
Vol 65 (1) ◽  
pp. 1-19
Author(s):  
Talknice Saungweme ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Public Debt ◽  
Debt Service ◽  
Bounds Testing ◽  
Causality Test ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Short Run

AbstractThis paper explores the causality between public debt, public debt service and economic growth in South Africa covering the period 1970 – 2017. The study employs the autoregressive distributed lag (ARDL) bounds testing approach to cointegration and the multivariate Granger-causality test. The empirical results indicate that there is unidirectional causality from economic growth to public debt, but only in the short run. However, the study fails to establish any causality between public debt service and economic growth, both in the short run and long run. In line with the empirical evidence, the study concludes that it is economic growth that drives public debt in South Africa, and that the causal relationship between public debt and economic growth is sensitive to the timeframe considered. The paper recommends policymakers in South Africa to consider growth-enhancing policies in the short run, since poor economic performances may lead to high public debt levels.

scholarly journals Public debt and economic growth: Further evidence for the euro area

2018 ◽  
Vol 68 (2) ◽  
pp. 209-229 ◽  
Author(s):  
Marta Gómez-Puig ◽  
Simón Sosvilla-Rivero
Keyword(s):  
Economic Growth ◽  
Euro Area ◽  
Public Debt ◽  
Negative Impact ◽  
Annual Data ◽  
Bounds Testing ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Short Run

This paper empirically investigates the short and the long run impact of public debt on economic growth. We use annual data from both the central and the peripheral countries of the euro area (EA) for the 1961–2013 period and estimate a production function augmented with a debt stock term by applying the Autoregressive Distributed Lag (ARDL) bounds testing approach. Our results suggest different patterns across the EA countries and tend to support the view that public debt always has a negative impact on the long-run performance of EA member states, whilst its short-run effect may be positive depending on the country.

Integration and Interdependence Among Equity Markets in South Asia: Measuring Through ARDL Bounds Approach

2020 ◽  
pp. 097639962095273
Author(s):  
J. Vineesh Prakash ◽  
D. K. Nauriyal
Keyword(s):  
South Asia ◽  
Equity Markets ◽  
Developed Countries ◽  
Testing Procedure ◽  
Regional Level ◽  
Capital Inflows ◽  
Bounds Testing ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run

This article examines the degree of integration among the financial markets in South Asia at regional and extra-regional levels by using monthly data collected for the period 2010–2018. It uses autoregressive distributed lag (ARDL) bounds test approach of cointegration, and short-run causalities are obtained under the error correction framework. The bounds testing procedure finds the existence of long-run relations among the four markets when the equity market of India is taken as the dependent variable. Although the bounds testing procedure finds some evidence of integration at the regional level, evidence suggests that integration at the global level is much higher than the integration at the regional level for this region. Another interesting finding is that Pakistan does not exhibit cointegrating relations with the rest of the equity markets in South Asia, and results are inconclusive when developed countries’ equity markets are introduced to the estimated models, which can be attributed to the political instability that Pakistan is consistently plagued with and also its strained relationship with India, thereby hampering capital inflows.

scholarly journals The Impact of Foreign Direct Investment on the Utilisation of Natural Resources in Nigeria

2018 ◽  
Vol 8 (2) ◽  
pp. 433-454
Author(s):  
Susan Nwadinachi Akinwalere
Keyword(s):  
Natural Resources ◽  
Resource Curse ◽  
Testing Procedure ◽  
Point Of View ◽  
Annual Data ◽  
Bounds Testing ◽  
Distributed Lag ◽  
Industrial Sectors ◽  
Long Run ◽  
The Impact

The purpose of this article is to examine the impact of FDI on the utilization of natural resources in Nigeria. This article uses annual data from 1970 to 2015 and employs the Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration, a testing procedure for level relationships developed by Pesaran and Shin (1999) and Pesaran et al. (2001). The ARDL cointegration approach examines the long-run relationship between FDI and natural resources on one hand and GDP on the other hand. The empirical results indicate that aggregate FDI has a positive and statistically significant impact on both natural resources and GDP in Nigeria. The ‘OIL’ variable presents a positive coefficient while GDP presents a negative estimated coefficient. From a policy point of view, countries such as Nigeria, endowed with natural resources, should pursue policies targeted at full deregulation (privatisation) of their natural resource sector to better utilise the abundance of their natural resources and attract additional FDI. Regarding GDP, there should be concerted efforts to boost the performance of the non-oil sector in Nigeria through more investments in the agricultural and industrial sectors which will make the growth of the economy spread across other sectors and, in turn, encourage national economic growth and development, reducing the possibility of the ‘resource curse’. This is the first paper that employs ARDL in determining the impact of FDI on the utilization of natural resources in Nigeria.

scholarly journals Tourism and economic growth in Greece: An ARDL bound testing approach in a Kaldorian framework

2020 ◽  
Vol 70 (2) ◽  
pp. 215-227
Author(s):  
Konstantinos Spinthiropoulos ◽  
Christos Nikas ◽  
Eleni Zafeiriou
Keyword(s):  
Economic Growth ◽  
Testing Procedure ◽  
Bounds Testing ◽  
Speed Of Adjustment ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Tourism Sector ◽  
Short Run ◽  
The Relationship

AbstractThe purpose of the study is to examine the relationship between tourism development and economic growth in Greece, using the Autoregressive Distributed Lag (ARDL)-Bounds testing procedure. The present paper attempts to examine the relevance of the tourism led growth hypothesis according to the Kaldorian theory. The analysis was carried out for the period from 1963 to 2016 and involves the short-run as well as the log-run impact. As a proxy for the output of the tourism sector, its receipts are employed, while as an index for economic growth, the GDP is employed. The empirical results show that the economy of Greece can recover and return to the long-run equilibrium with a speed of adjustment 7.17% per year.

scholarly journals The Nexus between Consumer Confidence and Economic Growth in South Africa: An ARDL Bounds Testing Approach

2019 ◽  
Vol 11 (2(J)) ◽  
pp. 15-22
Author(s):  
Khayelihle Madlopha
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
South African ◽  
Political Stability ◽  
Testing Procedure ◽  
Consumer Confidence ◽  
The South ◽  
Bounds Testing ◽  
Distributed Lag ◽  
Long Run

Consumption expenditure contributed a total of 2.2% to economic growth in 2017. Hence, the South African economy is consumption driven. Therefore, there is a need to understand the growth-economic confidence relationship within the South African context. In this spirit, this paper set to explore the short- and long-run relationship between consumer confidence and economic growth in South Africa for the sample period 1994Q1 to 2017Q4. The method applied, chiefly because our variables were I (0) and I (1) and that we sought short- and long-run estimates were the Autoregressive Distributed Lag (ARDL) model using the bounds testing procedure. The results showed that consumer confidence contributed about 0.025% to economic growth in the short-run, and about 0.4% in the long-run. The results suggest that boosting consumer confidence should be keys for South African policy-makers to boost growth in the short- and long-run. In particular, we recommend policy certainty and political stability as some of the ways to attract consumer confidence.

Does credit boost agricultural performance? Evidence from Vietnam

2020 ◽  
Vol 47 (9) ◽  
pp. 1203-1221
Author(s):  
Nguyen Tuan Anh ◽  
Christopher Gan ◽  
Dao Le Trang Anh
Keyword(s):  
Structural Breaks ◽  
Public Investment ◽  
Causality Test ◽  
Agricultural Credit ◽  
Content Type ◽  
Distributed Lag ◽  
Agricultural Performance ◽  
Long Run ◽  
Short Run ◽  
The Government

PurposeThis study investigates the short-run and long-run impacts of agricultural credit on Vietnam's agricultural GDP over the period 2004:Q4–2016:Q4, with the incorporation of agricultural labor, public investment and rainfall as important determinants of agricultural GDP.Design/methodology/approachThis study applies the indicator saturation (IS) break tests and the autoregressive distributed lag (ARDL) bounds test with structural breaks to examine the credit–agricultural performance nexus. The causal relationships among variables are explored through the Toda–Yamamoto Granger causality test.FindingsThe results indicate that agricultural credit positively influences agricultural GDP in both the short-run and long-run. A unidirectional causal relationship running from credit to agricultural GDP is confirmed. The results also discover the positive and significant effects of labor and rainfall on agricultural GDP in the long-run.Practical implicationsThe results imply that the government should focus on expanding agricultural credit as well as enhancing the efficiency of agricultural credit. Furthermore, formal credit institutions should be encouraged to work closely with farmers and agricultural enterprises to offer flexible lending periods and amounts to meet the real situation of agricultural production.Originality/valueThis study is the first to examine the credit–agricultural performance relationship at the macro-level in Vietnam. Based on the empirical results, the study provides crucial implications for policymakers to optimize the effectiveness of agricultural credit and enhance nationwide agricultural performance.

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