scholarly journals THE IMPACT OF NATIONAL DEFENSE EXPENDITURE ON GROWTH OF ECONOMY IN SRI LANKA

2021 ◽  
Vol 9 (3) ◽  
pp. 18-25
Author(s):  
S. Maheswaranathan ◽  
R. Jerusha
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Sri Lanka ◽  
Granger Causality ◽  
Money Supply ◽  
Capital Investment ◽  
Defense Spending ◽  
Defense Expenditure ◽  
Long Run ◽  
The Impact

This study aims to analyze the relationship between defense expenditure and growth of the economy in Sri Lanka applying annual data during the period between 1990-2019 by engaging the ARDL bounds test and the Granger causality test. Economic growth is considered as a dependent variable whereas; defense expenditure, broad money supply, capital investment and exchange rate are considered as independent variables for this study. The findings revealed that defense spending has a significant and positive effect on economic growth in the long- run. Exchange rate, capital investment and broad money supply have a significant and positive influence in the short-run and long-run. Further, the output of the Granger causality confirms the one-way association between the growth of the economy and defense expenditure. The study suggests that government should concentrate more on human capital development rather than spending on defense.

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 An Econometrics Analysis of the Impact Exchange Rate on Economic Growth of Nigeria

2021 ◽  
Vol 4 (3) ◽  
pp. 185-198
Author(s):  
Okosu Napoleon David
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Interest Rate ◽  
Money Supply ◽  
Current Account ◽  
Series Data ◽  
Current Account Balance ◽  
National Account ◽  
Long Run ◽  
The Impact

The study interrogates the impact of exchange rate on the economic growth of Nigeria from 1981 to 2020 using quarterly time-series data from the Central Bank of Nigeria and the World Bank National Account. The dependent variable in the model was Real Gross Domestic Product (RGDP), and the independent variables were Exchange Rate (EXCHR), inflation (INFL), Interest Rate (INTR), Foreign Direct Investment (FDI), Broad Money Supply (M2) and Current Account Balance of Payment (CAB). The methodology employed was the Auto-Regressive Distributed Lag (ARDL) model which incorporates the Cointegration Bond test and Error-Correction Mechanism. The finding indicates that in the short run, EXCHR, CAB, M2 and FDI, had a positive impact on economic growth. The impact of EXCHR and CAB were significant on growth while that of M2 and FDI were insignificant to growth. However, INTR and INFL had a negative impact on economic growth with both variables being statistically significant. The bound test showed that there was a long-run relationship among the study variables, and the results from the long run reveal that the exchange rate has a positive and significant impact on economic growth. Inflation, Interest rate, FDI, Current Account Balance of Payment (CAB) and Broad Money Supply all have a positive and significant impact on economic growth. Based on the findings the study recommended that monetary authority should strictly monitor the operations of banks and other forex dealers with a view of ensuring unethical practices are adequately sanctioned to serve as a deterrent to others.

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 Impact of Domestic Public Debt on Economic Growth - An Empirical Study in the Indian Context

2016 ◽  
Vol 6 (4) ◽  
pp. 101-116
Author(s):  
Srinivasa Rao Gangadharan ◽  
Lakshmi Padmakumari
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Positive Impact ◽  
Least Square ◽  
Distributed Lag ◽  
Long Run ◽  
Domestic Debt ◽  
Integration Test ◽  
Ordinary Least Square Regression ◽  
The Impact

This study is an empirical investigation to assess the impact of domestic debt on India’s Economic growth during the period 1980 – 2014. We use data on Domestic Debt, Net Fiscal Deficit, Exports, Savings, Real Gross Domestic Product, Population and Terms of Trade. This study adopts the ARDL Co-Integration and Granger Causality techniques to investigate the relation between the key variables. The study also employs various post estimation tests to validate the fitness and stability of the models based on Gauss Markov assumptions, after employing the ordinary least square regression on various models. We find that debt negatively impacts economic growth while savings has a positive impact. The Auto Regressive Distributed Lag (ARDL) technique used to test the robustness suggests existence of co-integration among the variables. However, none of the long run co-efficient is significant. The granger causality and co-integration test results support the traditional view that debt negatively impacts economic growth.

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.

scholarly journals TRADE OPENNESS AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM INDIA

2014 ◽  
Vol 16 (1) ◽  
pp. 188-205 ◽  
Author(s):  
Qazi Muhammad Adnan Hye ◽  
Wee-Yeap Lau
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Granger Causality ◽  
Trade Openness ◽  
Granger Causality Test ◽  
Causality Test ◽  
Long Run ◽  
Rolling Window ◽  
Short Run ◽  
The Impact

The main objective of this study is to develop first time trade openness index and use this index to examine the link between trade openness and economic growth in case of India. This study employs a new endogenous growth model for theoretical support, auto-regressive distributive lag model and rolling window regression method in order to determine long run and short run association between trade openness and economic growth. Further granger causality test is used to determine the long run and short run causal direction. The results reveal that human capital and physical capital are positively related to economic growth in the long run. On the other hand, trade openness index negatively impacts on economic growth in the long run. The new evidence is provided by the rolling window regression results i.e. the impact of trade openness index on economic growth is not stable throughout the sample. In the short run trade openness index is positively related to economic growth. The result of granger causality test confirms the validity of trade openness-led growth and human capital-led growth hypothesis in the short run and long run.

scholarly journals Trade Openness and Economic Growth Nexus in Pakistan

2020 ◽  
Vol V (III) ◽  
pp. 22-33
Author(s):  
Ghulam Yahya Khan ◽  
Muhammad Masood Anwar ◽  
Aftab Anwar
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Interest Rate ◽  
Granger Causality ◽  
Direct Investment ◽  
Trade Openness ◽  
Explanatory Variables ◽  
Integration Approach ◽  
Long Run

This study explores the nexus amongst trade openness and economic growth for Pakistan for 1981-2019. Trade-openness is a dependent variable, and it is measured as imports plus exports to GDP ratio. Economic growth, Foreign Direct Investment, Inflation, Exchange rate, and interest rate are taken as explanatory variables. Co-integration approach by Johansen and Juselius (1988, 1991) has been used for long-run relationships. Results indicate that Trade-Openness has significantly affected the economic growth and other control variables of the study for Pakistan. There exist bidirectional Granger Causality in the selected variables.

scholarly journals The Impact Of Budget Deficits On Macro-Economic Variables In The Nigerian Economy (1981 – 2012)

2014 ◽  
Vol 2 (11) ◽  
pp. 164-183
Author(s):  
B.O Osuka ◽  
Achinihu Joy Chioma
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Granger Causality ◽  
Budget Deficit ◽  
Nominal Exchange Rate ◽  
Budget Deficits ◽  
Economic Variables ◽  
Long Run ◽  
Johansen Cointegration Test ◽  
The Impact

This study examined the impact of budget deficits on macro-economic variables in the Nigerian economy for theperiod 1981-2012. This study sought to find out if there is a long-run relationship between budget deficits and other macro-economic variables in Nigeria. The study used the Augmented Dickey-Fuller (ADF) methods for finding out the presence of unit root in all variables and found that they are stationary at first differencing; they are 1(1). We also used Johansen Cointegration test to check for the cointegration of the variables and found that the variables in the study are all cointegrated of order one showing the presence of long-run relationship between budget deficits and our selected macro-economic variables ( GDP, interest rate, nominal exchange rate and inflation rate). The Granger Causality results reveal that there is a uni-directional Granger-causality between Budget deficits and GDP with GDP granger causing budget deficit. However, the test for causality showed that there exists no causality between deficits and interest rate, budget deficits and inflation and budget deficit and nominal exchange rate. We thereby concluded that budget deficits exert significant impact on the macro-economic performance of the Nigerian economy. The study recommend that since budget deficits could crowd-in investment through its reducing effects in interest rate, but emphasis should be placed on capital goods expenditure to make it have positive effect on GDP and thereby contribute to economic growth and development.

scholarly journals Imperative of Exchange Rates Policy and Industrial Growth in Nigeria: A Time Series Analysis

2017 ◽  
Vol 10 (2) ◽  
pp. 187-198 ◽  
Author(s):  
Olatunji A. Shobande
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Money Supply ◽  
Exchange Rate Policy ◽  
Industrial Growth ◽  
Vector Error Correction ◽  
Tax Incentive ◽  
Long Run ◽  
Speed Up ◽  
The Impact

Abstract This paper looks at the impact of foreign exchange rate policies on industrial growth in Nigeria between 1981 and 2016. The study employed the Vector Error Correction Model (VECM) techniques, following the results of Johansen Cointegration techniques that shows the existence of long run relationship among the variables considered. While, VECM estimates showed that money supply (monetary policy) impacted positively effects, evidence on, TAX (fiscal policy) impacted negative on industrial growth. Besides, the Exchange rate and Inflation impacted negatively on industrial growth., suggesting that the issue of stability remained a challenge unresolved by the Apex bank. The emanating policy antidotes are that there is urgent need to use proactive monetary policy through money supply to speed up the rate of industrial growth on one hand, while providing tax incentive to various industrial good that can further have enhanced the contribution of the sector to industrial growth on the other. In all, the need to align the objective of exchange rate policy with broader macroeconomic goals is necessary for effective policy transmission mechanism to speed up the rate of industrial progress in the country.

The impact of macroeconomic variables on the budget deficit in Bangladesh: an econometric analysis

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Md. Mahbub Alam ◽  
Md. Nazmus Sadekin ◽  
Sanjoy Kumar Saha
Keyword(s):  
Granger Causality ◽  
Money Supply ◽  
Budget Deficit ◽  
Real Effective Exchange Rate ◽  
Causality Test ◽  
Content Type ◽  
Macroeconomic Variables ◽  
Long Run ◽  
Effective Exchange ◽  
The Impact

PurposeThis paper aims to investigate the impact of selected macro-economic variables like real effective exchange rate (REER), GDP, inflation (INF), the volume of trade (TR) and money supply (M2) on-budget deficit (BD) in Bangladesh over the period of 1980–2018.Design/methodology/approachBy using secondary data, the paper uses the Vector Error Correction Model (VECM) and Granger Causality test. Johansen’s cointegration test is used to examine the long-run relationship among the variables under study.FindingsJohansen’s cointegration test result shows that there exists a positive long-run relationship of selected macroeconomic variables (real effective exchange rate, inflation, the volume of trade and money supply) with the budget deficit, whereas GDP has a negative one. The short-run results from the VECM show that GDP, inflation and money supply have a negative relationship with the budget deficit. The Granger Causality test results reveal unidirectional causal relationships running from BD to REER; TR to BD; M2 to BD; GDP to REER; M2 to REER; INF to GDP; GDP to TR; M2 to GDP and bidirectional causal relationship between GDP and BD; TR and REER; M2 and TR.Originality/valueBangladesh has been experiencing a budget deficit since 1972 due to a decline in sources of revenue. This study contributes to the empirical debate on the causal nexus between macroeconomic variables and budget deficits by employing VECM and Granger Causality approaches.

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