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.

Public Debt Service in South Africa and Its Impact on Economic Growth: An Empirical Test

2020 ◽  
pp. 003464462096022
Author(s):  
Talknice Saungweme ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Public Debt ◽  
Empirical Test ◽  
Debt Service ◽  
Policy Implications ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Short Run

By applying the autoregressive distributed lag approach, this article investigates the dynamic impact of public debt service on economic growth in South Africa, covering the period from 1970 to 2017. In the recent past, alarming bells have already started sounding about the country’s high debt/gross domestic product (GDP) ratio amid chronic low GDP growth. The article seeks to contribute to the debate that limiting the proportion of public debt service payments to gross national product can achieve economic growth by freeing domestic resources. The empirical findings of the study show that there is no statistically significant relationship between public debt service and economic growth in South Africa, irrespective of whether the estimations are done in the long run or in the short run. Policy implications are discussed.

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.

scholarly journals Electricity Consumption and Economic Growth in Jordan: Bounds Testing Cointegration Approach

2016 ◽  
Vol 12 (1) ◽  
pp. 429
Author(s):  
Al-Abdulrazag A. Bashier
Keyword(s):  
Economic Growth ◽  
Strong Support ◽  
Electricity Consumption ◽  
Bounds Testing ◽  
Causality Test ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Short Run

The objective of this paper is to investigate the short-run and longrun causal relationships between electricity consumption and economic growth in Jordan between 1976 and 2013, utilizing the Autoregressive Distributed Lag (ARDL) model. Estimates revealed the existence of a longrun equilibrium relationship between the said variables. The VECM model results indicated a long-run, bidirectional causality between the two variables as seen from the negative and significant error correction terms. The results of Granger-Causality test within VECM disclosed a bidirectional weak and strong short-run causality between electricity consumptions per capita and economic growth. The estimation results provide a strong support for the feedback hypothesis in Jordan

scholarly journals Does Remittance Inflow Granger-Cause Economic Growth in South Africa? A Dynamic Multivariate Causality Test

2019 ◽  
Vol 47 (1) ◽  
pp. 86-103
Author(s):  
Sheilla Nyasha ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Causal Link ◽  
Causality Test ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Poverty And Inequality ◽  
Short Run ◽  
Omission Bias

In this study, we examine the dynamic causal relationship between remittances and economic growth in South Africa during the period from 1970 to 2017. Although South Africa is well-known for being a source of cross-border remittances to various countries, especially in the African continent, remittance inflows to South Africa have grown in the recent past. The growth in remittances, on one hand, and the need to fight against poverty and inequality in South Africa and ultimately improve economic growth, on the other hand, prompted the need for this study. The study uses the autoregressive distributed lag (ARDL) approach within a multivariate Granger-causality setting to examine the remittance-growth causal link—in an effort to address the variable-omission bias. The empirical findings of the study show that remittances and economic growth are not causally related in South Africa, irrespective of whether the estimations are done in the long run or in the short run. This finding, though contrary to the expectation, is not surprising, given the level of financial sector development in South Africa.

scholarly journals FDI location and exchange rates. is there really a relationship between the two?

2015 ◽  
Vol 13 (1) ◽  
pp. 642-651
Author(s):  
Kunofiwa Tsaurai
Keyword(s):  
South Africa ◽  
Exchange Rates ◽  
Coming Out ◽  
Causal Relation ◽  
Exact Nature ◽  
Bounds Testing ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Short Run

The exchange rate led foreign direct investment (FDI), FDI led exchange rates and feedback effect hypotheses summarise the literature around the nature of the relationship between FDI and exchange rates. So many authors on this subject over a long period have been found to generally side with of the above-mentioned hypothesis or another without a consensus. Despite this lack of consensus with regard to the exact nature of the causal relation between these two variables, what is coming out clearly from the literature is that there indeed exist a relationship between FDI and exchange rates. The lack of consensus has prompted this current study that used the ARDL (Autoregressive distributed lag)-bounds testing approach. The study revealed the existence of causality from (1) the rand value to FDI in the long run and (2) FDI to the rand value only in the short run in South Africa. The author recommends that policies which strengthen the value of the rand should be put in place in order to attract FDI in the long run. The flow of FDI into South Africa will in turn not only stabilises the value of the rand.

Electricity Consumption–Economic Growth Nexus: Evidence from ARDL Bound Testing Approach in the Tunisian Context

2020 ◽  
pp. 097215092092543 ◽  
Author(s):  
Zouheir Mighri ◽  
Hanen Ragoubi
Keyword(s):  
Economic Growth ◽  
Electricity Consumption ◽  
Bounds Testing ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Causality Tests ◽  
Short Run ◽  
Testing Approach ◽  
Causal Nexus

This article investigates the causal nexus between electricity consumption and economic growth in Tunisia for the period 1971–2013 by using autoregressive distributed lag (ARDL) bounds testing approach of cointegration and Granger causality tests. The empirical findings indicate the existence of a long-term relationship between electricity consumption and economic growth. Besides, they support the conservation hypothesis in the long run, while they confirm the growth hypothesis in the short run.

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 A Dynamic Analysis of the Impact of Fiscal Adjustment on Economic Growth: Evidence From Pakistan

SAGE Open ◽  
2021 ◽  
Vol 11 (2) ◽  
pp. 215824402110271
Author(s):  
Ibrar Hussain ◽  
Jawad Hussain ◽  
Arshad Ali ◽  
Shabir Ahmad
Keyword(s):  
Economic Growth ◽  
Causality Test ◽  
Distributed Lag ◽  
Fiscal Adjustment ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Empirical Calibration ◽  
Short Run ◽  
S Model ◽  
The Impact

This study claims to be the first in assessing the short-run and long-run impacts of both the size and composition of fiscal adjustment on the growth in Pakistan. Empirical calibration has been made on Mankiw et al.’s model, while the Autoregressive Distributed Lag (ARDL) techniques of Pesaran et al. have been employed to carry out the estimation. To cure the problem of degenerate cases, the ARDL techniques have been augmented with the model of Sam et al. The analysis supports the hypothesis of “expansionary fiscal contraction” in the long run. The analysis reveals that the spending-based adjustment enhances the economic growth, whereas the tax-based adjustment would reduce the growth in the long run in the case of Pakistan. The Granger causality test indicates that the fiscal adjustments have been weakly exogenous, thereby allowing feedback effect from the economic growth toward the fiscal adjustment. Thus, the objective of sustained economic growth can be achieved through the spending-based consolidation measures.

scholarly journals Government Spending and Economic Growth in Ghana: Evidence from Granger Causality Analysis

2017 ◽  
Vol 3 (2) ◽  
pp. 50-58 ◽  
Author(s):  
Lucy Anning ◽  
Wang Haisu ◽  
Joshua Sunday Riti
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Government Spending ◽  
Causality Analysis ◽  
Economic Activities ◽  
Bounds Testing ◽  
Causality Test ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run

In spite of the diverse major issues affecting the economy of Ghana over the years, the economy continues to experience a downward spiral in its economic growth. Taking into account three opining views regarding government spending and economic growth, this study sets to investigate the causal nexus fractious and economic growth in Ghana. We apply the autoregressive distributed lag (ARDL) bounds testing approach to co-integration and the vector error correction model (VECM)-Granger causality test to evaluate both long- and short-run parameters including the direction of causation with data spanning from 1980 and 2015.The empirical results show evidence of co-integration for the existence of a long-run relationship between the dependent and independent variables. The Granger causality tests, in addition, indicated causal independence between government spending and economic growth within the time framework of the study in the economy of Ghana. Government spending has a cause effect on economic growth in Ghana. However, government spending channeled into a more fractious use with the building of resilience and infrastructural development that are self-liquidating if encouraged will enhance economic activities in the short run and also propel growth in the long run in the Ghana.

Defence Spending and Economic Growth in South Africa: Evidence from Cointegration and Co-Feature Analysis

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Charles Shaaba Saba
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Granger Causality ◽  
Growth Series ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Defence Spending ◽  
Short Run ◽  
The Business Cycle

Abstract The paper revisits the causality relationship between defence spending and economic growth for South Africa during the period 1960–2018. The results of our estimation show that defence spending and economic growth are cointegrated and that there is bidirectional Granger causality running between defence spending and economic growth in the long run. We then applied a Hodrick-Prescott filter to decompose the trend and the fluctuation components of the defence spending and economic growth series. The findings from the autoregressive distributed lag bounds test estimations show that in the long- and short-run, the trends and cyclicality of defence spending retard economic growth. The estimation results show that there is cointegration between the trends and the cyclical components of the two series, which suggests that the Granger causality possibly relates to the business cycle. This study suggests that investing more and reducing inefficiency spending in the defence sector during fluctuations can further stimulate economic growth in South Africa.

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