scholarly journals Reconnoitering the Sustainable Relationship Between Revenue Income and GDP: A Comparative Study of Asymmetric Countries in the World

2021 ◽  
Vol 4 (2) ◽  
Author(s):  
Aoulad Hosen
Keyword(s):  
Growth Rate ◽  
Percent Level ◽  
Unit Root Test ◽  
Gdp Growth ◽  
Middle Income ◽  
Long Run ◽  
Gdp Growth Rate ◽  
Short Run ◽  
Asymmetric Countries ◽  
The Government

This paper applies panel unit root test, country Pedroni cointegration test (PCT), Phillips-Peron cross section test (PPCST), vector error correction test and Johansen normalized cointegrating test (JNCT) for estimates the coefficients in the short-run and in the long-run to examine the inter-temporal relationship between the government revenues income and GDP. The paper took into account fifteen asymmetric countries with three income groups over the period of 2001 to 2016. The study justified the long run relationship between the articulated variables by the country PCT and the test results unearthed that four statistics out of seven on different indexes exhibited one percent level of significance. In the upper middle income country category, other than Brazil and Sri Lanka, rest of three countries showed long run relationship, i.e. the study outcome reconnoitered the existence of long run relationship between the two articulated variables. Decisively, the outcome of JNCT suggests that in the long run if the government revenue upsurge one percentage point then GDP growth rate will rise 0.037 and 0.28 percentage point for the countries that belongs to high income and the upper middle income respectively. Meanwhile, the test find negative result that allied to lower middle income nations, GDP growth rate will plummet 0.039 percent point due to one percent rise in revenue income. 

scholarly journals The Relationship between Current Account Deficits and Growth in Montenegro: ARDL Bounds Testing Approach

2018 ◽  
Vol 7 (3) ◽  
pp. 5-24 ◽  
Author(s):  
Mustafa Özer ◽  
Jovana Žugić ◽  
Sonja Tomaš-Miskin
Keyword(s):  
Growth Rate ◽  
Current Account ◽  
Current Account Deficit ◽  
Gdp Growth ◽  
Bounds Testing ◽  
Current Account Deficits ◽  
Long Run ◽  
Gdp Growth Rate ◽  
Short Run ◽  
The Relationship

Abstract In this study, we investigate the relationship between current account deficits and growth in Montenegro by applying the bounds testing (ARDL) approach to co-integration for the period from the third quarter of 2011 to the last quarter of 2016. The bounds tests suggest that the variables of interest are bound together in the long run when growth is the dependent variable. The results also confirm a bidirectional long run and short run causal relationship between current account deficits and growth. The short run results mostly indicate a negative relationship between changes in the current account deficit GDP ratio and the GDP growth rate. This means that any increase of the value of independent variable (current account deficit GDP ratio) will result in decrease of the rate of GDP growth and vice versa. The long-run effect of the current account deficit to GDP ratio on GDP growth is positive. The constant (β0) is positive but also the (β1), meaning that with the increase of CAD GDP ratio of 1 measuring unit, the GDP growth rate would grow by 0,5459. This positive and tight correlation could be explained by overlapping structure of the constituents of CAD and the drivers of GDP growth (such as tourism, energy sector, agriculture etc.). The results offer new perspectives and insights for new policy aiming for sustainable economic growth of Montenegro.

scholarly journals Taxation, government spending and economic growth: The case of Bulgaria

2021 ◽  
Vol 7 (3) ◽  
pp. 255-266
Author(s):  
G. Ganchev ◽  
◽  
I. Todorov ◽  
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Tax Revenue ◽  
Gdp Growth ◽  
Real Gdp ◽  
Long Run ◽  
Gdp Growth Rate ◽  
Short Run ◽  
The Impact

The objective of this article is to estimate the impact of three fiscal instruments (direct taxes, indirect taxes, and government expenditure) on Bulgaria’s economic growth. The study employs an autoregressive distributed lag model (ARDL) and Eurostat quarterly seasonally adjusted data for the period 1999–2020. Four control variables (the shares of gross capital formation, household consumption, and exports in GDP as well as the economic growth in the euro area) are included in the model to account for the influence of non-fiscal factors on Bulgaria’s real GDP growth rate. The empirical results indicate a long-run equilibrium relationship between Bulgaria’s economic growth and the independent variables in the ARDL. In the short term, Bulgaria’s real GDP growth rate is affected by its own past values and the previous values of the shares of direct tax revenue, exports, government consumption, and indirect tax revenue in GDP. In the long term, Bulgaria’s economic growth is influenced by its own previous values and the past values of the share of household consumption in GDP and the euro area’s real GDP growth rate. Fiscal instruments can be used to stabilize Bulgaria’s growth in the short run but they are neutral in the long run. The direct tax revenue, government consumption, and indirect tax revenue are highly effective and can be used as tools for invigorating and stabilizing Bulgaria’s economic growth in the short run. However, in the long term, the real GDP growth rate can be hastened only by encouraging domestic demand (final consumption expenditure of households) and promoting exports. This research cannot answer the question of whether flat income taxation stabilizes the economy or not, since it does not separate the impact of tax rate changes from the influence of tax base modifications.

scholarly journals Revisiting inflation and growth nexus: an asymmetric cointegration based on Non-linear ARDL approach in case of Bangladesh

2021 ◽  
Vol 13 (2) ◽  
pp. 105-136
Author(s):  
Zobayer Ahmed
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Economic Development ◽  
Inflation Rate ◽  
Gdp Growth ◽  
Long Run ◽  
Gdp Growth Rate ◽  
Ardl Approach ◽  
Short Run ◽  
Asymmetric Cointegration

Sustainable high economic growth is the major objective of a country. Whereas inflation is one of the critical factors that affect economic development. Growth-inflation nexus is one of the most controversial topics in this present world. This study re-investigates the link between inflation and the economic development of Bangladesh by employing a non-linear autoregressive distributed lagged (NARDL) approach. For this study, we use annual time series data set on the growth rate of per capita gross domestic product, and the inflation rate for the time range from 1986 to 2017. The asymmetric cointegration result based on the NARDL approach shows the confirmation of long-run integration between the GDP growth rate and inflation rate (CPI). The study finds a positive and robust nexus between growth rate and inflation rate. The relationship exists both in the long-run as well as in the short-run. The results also have statistically significant. This study further explores that there is an asymmetric relationship between the rate of inflation and the rate of economic growth. The nonlinear ARDL approach shows that the GDP growth rate responds more with an upward change in inflation than that of a downward change. Furthermore, in the short-run, the positive change in inflations has a significant and positive influence on the growth rate. Still, the influence of an adverse change in inflations has statistically insignificant. Both the policymakers of Bangladesh (Bangladesh Bank) and development partners working in the country can be benefited from these results in the context of policy implementation. This study recommends that to boosting up the economic growth in the context of Bangladesh, the inflation rate can be treated as a significant determination.

scholarly journals Revisiting inflation and growth nexus: an asymmetric cointegration based on Non-linear ARDL approach in case of Bangladesh

2021 ◽  
Vol 13 (2) ◽  
pp. 371-402
Author(s):  
Zobayer Ahmed
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Economic Development ◽  
Inflation Rate ◽  
Gdp Growth ◽  
Long Run ◽  
Gdp Growth Rate ◽  
Ardl Approach ◽  
Short Run ◽  
Asymmetric Cointegration

Sustainable high economic growth is the major objective of a country. Whereas inflation is one of the critical factors that affect economic development. Growth-inflation nexus is one of the most controversial topics in this present world. This study re-investigates the link between inflation and the economic development of Bangladesh by employing a non-linear autoregressive distributed lagged (NARDL) approach. For this study, we use annual time series data set on the growth rate of per capita gross domestic product, and the inflation rate for the time range from 1986 to 2017. The asymmetric cointegration result based on the NARDL approach shows the confirmation of long-run integration between the GDP growth rate and inflation rate (CPI). The study finds a positive and robust nexus between growth rate and inflation rate. The relationship exists both in the long-run as well as in the short-run. The results also have statistically significant. This study further explores that there is an asymmetric relationship between the rate of inflation and the rate of economic growth. The nonlinear ARDL approach shows that the GDP growth rate responds more with an upward change in inflation than that of a downward change. Furthermore, in the short-run, the positive change in inflations has a significant and positive influence on the growth rate. Still, the influence of an adverse change in inflations has statistically insignificant. Both the policymakers of Bangladesh (Bangladesh Bank) and development partners working in the country can be benefited from these results in the context of policy implementation. This study recommends that to boosting up the economic growth in the context of Bangladesh, the inflation rate can be treated as a significant determination.

scholarly journals Do Military Expenditure and Conflict Affect Economic Growth in Sri Lanka? Evidence from the ARDL Bounds Test Approach

2016 ◽  
Vol 8 (3) ◽  
pp. 1
Author(s):  
Abdul Rasheed Sithy Jesmy ◽  
Mohd Zaini Abd Karim ◽  
Shri Dewi Applanaidu
Keyword(s):  
Growth Rate ◽  
Civil War ◽  
Sri Lanka ◽  
Military Expenditure ◽  
Gdp Growth ◽  
Per Capita Gdp ◽  
Long Run ◽  
Gdp Growth Rate ◽  
Per Capita ◽  
Bounds Test

Conflicts in the form of civil war, ethnic tensions and political discord are of enduring concern and a major bottleneck to economic development in Sri Lanka. Three decades of civil war and unethical political culture have caused severe economic problems for the country, including slower rate of growth and a huge defence expenditure. The aim of this study is to examine the effect of military expenditure and conflict on per capita GDP growth rate in Sri Lanka from 1973 to 2014 using the Solow growth model and ARDL bounds test approach. The results of the bounds test are highly significant and lead to cointegration. The negative and significant coefficients of the error correction term illustrate the expected convergence process in the long-run dynamic of per capita GDP. The estimated empirical results show that, the coefficients of military expenditure and conflict are negative and statistically significant in the short-run as well as in the long-run in determining per capita GDP growth rate in Sri Lanka. Hence, it is critically important to take necessary action to decrease military expenditure and provide an efficient political solution to the problem of minorities, specifically in the post-war period.

scholarly journals Do Erratic Rainfalls Hamper Grain Production? Analysis of Supply Response of Rice to Price and Non-Price Factors

Agronomy ◽  
2021 ◽  
Vol 11 (8) ◽  
pp. 1463
Author(s):  
Ghulam Mustafa ◽  
Azhar Abbas ◽  
Bader Alhafi Alotaibi ◽  
Fahd O. Aldosri
Keyword(s):  
Unit Root Test ◽  
Rice Production ◽  
Vector Error Correction ◽  
Supply Response ◽  
Target Time ◽  
Vector Error ◽  
Long Run ◽  
Short Run ◽  
The Government ◽  
The Impact

Increasing rice production has become one of the ultimate goals for South Asian countries. The yield and area under rice production are also facing threats due to the consequences of climate change such as erratic rainfall and seasonal variation. Thus, the main aim of this work was to find out the supply response of rice in Malaysia in relation to both price and non-price factors. To achieve this target, time series analysis was conducted on data from 1970 to 2014 using cointegration, unit root test, and the vector error correction model. The results showed that the planted area and rainfall have a significant effect on rice production; however, the magnitude of the impact of rainfall is less conspicuous for off-season (season 2) rice as compared to main-season rice (season 1). The speed of adjustment from short-run to long-run for season-1 rice production is almost two-and-a-half years (five production seasons), while for season-2 production, it is only about one-and-a-half year (three production seasons). Consequently, the study findings imply the supply of water to be enhanced through better water infrastructure for both seasons. Moreover, the area under season 2 is continuously declining to the point where the government has to make sure that farmers are able to cultivate the same area for rice production by providing uninterrupted supply of critical inputs, particularly water, seed and fertilizers.

scholarly journals Understanding the Interaction of Chinese Fiscal and Monetary Policy

2021 ◽  
Vol 14 (9) ◽  
pp. 416
Author(s):  
Zehua Luan ◽  
Xiangyu Man ◽  
Xuan Zhou
Keyword(s):  
Growth Rate ◽  
Monetary Policy ◽  
Response Level ◽  
Positive Effects ◽  
Long Run ◽  
Gdp Growth Rate ◽  
Downward Pressure ◽  
Short Run ◽  
Relative Change ◽  
Fiscal And Monetary Policy

Interaction of fiscal and monetary policy is crucial for macroeconomic stability, especially for an economy with downward pressure as well as a tightened space for macro policy, like China. In this paper, we use a time-varying-parameter (TVP-VAR) model to study Chinese fiscal–monetary interaction and divide it into three periods. We claim that China went through a monetary dominant regime from 1996Q to 2017Q4 since the response of CPI to a fiscal expansion was negative in the short run and about zero in the long run, while the monetary expansion had positive effects on CPI. During this period, the response of government spending and money supply to each other’s shock had the same sign, indicating that the two policies acted as complements. However, we argue that 2008Q4 was a turning point that divided this period into two different periods. The response level of M2 growth rate to a fiscal expansion kept rising from 1996Q1 to 2008Q4, indicating the central bank’s increasingly active cooperation with fiscal policy, while it decreased from 2009Q1 to 2017Q4. Since 2018Q1, the economy has been going through a fiscal dominant regime in that the response of GDP growth rate and CPI to the fiscal expansion has sharply increased. We also argue that the relative change of the role between the two policies should be mainly attributed to the variation in the fiscal authority’s characteristics because fiscal response to a monetary shock has remained at a similar level the whole time, even if there have been changes in the characteristics of the central bank.

scholarly journals Domestic Debt and Economic Growth in Tanzania

2018 ◽  
Vol 1 (1) ◽  
pp. p207
Author(s):  
Josephat Lotto ◽  
Catherine T. Mmari
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Gdp Growth ◽  
Gdp Growth Rate ◽  
Domestic Debt ◽  
Negative Effect ◽  
The Government ◽  
The Impact ◽  
The Relationship ◽  
Positive Effect

The main objective of this paper was to examine the impact of domestic debt on economic growth in Tanzania for the period 1990 to 2015 using Ordinary Least Square (OLS) regression method to estimate the effects. The study finds that there is an inverse but insignificant relationship between domestic debt and the economic growth of Tanzania as measured by GDP annual growth. The inverse relationship between domestic debt and GDP may be caused by different factors such as; increased trend in domestic borrowing, government lenders’ profile dominated by commercial banks and non-bank financial institutions which promotes the “crowding out” effect; the nature of the instruments used by the government ; the improper use of the domestic borrowed funds which may include funding budgetary deficits, paying up principal and matured obligations on debt, developing financial markets as well as fund other government operations. Other control variables relate with the GDP as predicted. For example, Inflation (INF) has a negative effect on the GDP growth rate, but the relationship is not statistically significant, while gross capital formation (GCF) has a positive statistically significant effect on GDP growth rate. Furthermore, foreign direct investment (FDI) showed a positive effect on the GDP growth rate and export (X) has a positive effect on GDP growth rate, and the relationship is statistically significant explaining that if a country applied an export-led growth economic strategy it enjoys the gains of participating in the world market. This means that an increase in export stimulates demand for goods which leads to increase in output, and as a country’s output increases, the economic performance also takes a similar trend. Finally, government expenditure (GE) had a negative effect on the GDP growth rate which may be explained by the increased government expenditures which are funded by either tax or borrowing. Therefore, what is required for countries like Tanzania is to have better debt management strategies as well as prudential financial management while maintaining to remain within the internationally acceptable debt level of 45% of GDP and maintain a GDP growth rate of not less than 5%. It is important for the country to realize from where to borrow from, the tenure, the risks involved and limitations to borrowing and thus set the right balance of combination of both kinds of debt. Another requirement is to properly utilize the borrowed funds. The central government’s objective should be to use the funds in more development-oriented projects that bring positive returns to the economic development.  The government should not only create a right environment and policies for investment to attract investment from domestic and foreign sources but also be cautious about the kind of investments that the foreign investors make.

scholarly journals FOREIGN DIRECT INVESTMENT AND EXPORT PERFORMANCE OF THE PAKISTAN COINTEGRATION AND CAUSALITY APPORACH

2015 ◽  
Vol 11 (1) ◽  
Author(s):  
Abdur Rahman Aleemi ◽  
Keyword(s):  
Growth Rate ◽  
Foreign Direct Investment ◽  
Interest Rate ◽  
Interest Rates ◽  
Direct Investment ◽  
Export Performance ◽  
Gdp Growth ◽  
Local Market ◽  
Long Run ◽  
Gdp Growth Rate

FDI is a bridge between the world markets and local market and works as a way to increase the capabilities of the host country through investments that help in transfer of technology and creation of employment opportunities. The aim of this paper was to investigate the nexus of Foreign Direct Investment and the Export performance in the economic settings of Pakistan along in the presence of explanatory variables, based on well-established economic theory and long standing relationships. Supplementing the variables into a linear regression model, tested under the OLS and checked for the assumptions of normally and identically distributed errors, it was found that exports are positively affected by FDI and CPI whereas negatively affected by the interest rates in the case of Pakistan. Furthermore the long run relationship between the variables has been tested under the Johensen Cointegration test, which suggest that a long run relationship exist between the variables. Finally the direction of causality has been investigated with the help of Granger Causality test, indicating a bidirectional causality between CPI and interest rate, exports and interest rate, unidirectional causality from exports to CPI, CPI to GDP growth rate, interest rate to GDP growth rate, exports to FDI and exports to GDP growth rate.

scholarly journals Dynamic Impact of Trade Openness on the Economic Growth in Nigeria

2019 ◽  
Vol 8 (5C) ◽  
pp. 609-616
Keyword(s):  
Economic Growth ◽  
Trade Openness ◽  
Unit Root Test ◽  
Secondary Data ◽  
Dynamic Impact ◽  
Long Run ◽  
Short Run ◽  
Private And Public ◽  
The Government ◽  
The Masses

In theory, it was conforming to the accepted standard the open economies grow faster than the closed economies, and respectable economic development level could be achieved. This paper investigates the dynamic impact of trade openness on the economic growth in Nigerian economy between 1980 - 2016 empirically. Secondary data were sourced, from the 2016 Central Bank of Nigeria Statistical Bulletin’. The tests of diagnostic conducted are: cointegration test, unit root test and error correction model. The analysis result revealed the trade openness was found to have negatively impacted on the economic growth in both the short run and long run. Based on study findings, it is recommended that since the imports of the country are more than its export; the government needs to have the present efforts to sustain the diversification of the economy to achieve economic growth led by exports. Furthermore, the collaborative effort of government with private sectors should encourage the export substitute in the nation to discourage importation and promote export of primary commodities especially the ones that have absolute advantages to the nation. Lastly, the study also recommended that the government of the country should sustain the policy of Treasury Single Account (T.S.A) so as that the loopholes will be blocked in the private and public sectors of the nation, and also to make sure there is equity in the utilization of the revenue generated internally for the masses to benefit.

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