scholarly journals Inflation and Economic Growth Paradox: A Co-integration Analysis in Nepal

2021 ◽  
Vol 2 (3) ◽  
pp. 1-12
Author(s):  
Uttam Lal Joshi
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Correction Term ◽  
Unit Roots ◽  
Threshold Level ◽  
Long Run ◽  
Augmented Dickey Fuller ◽  
Short Run ◽  
Lag Model ◽  
Monetary And Fiscal Policy

The empirical study investigates the relationship between economic growth, inflation and broad money supply in Nepal. Data since 1965 to 2020 are taken from World Bank and Autoregressive Distributive Lag Model is used to find cointegration between the variables to show long run and short run dynamics. Augmented Dickey- Fuller and Philips- Perron tests are conducted to find the unit roots in the model. Result shows the error correction term is negative (-0.75) and significant (0.0043) where bounds test supports the long run cointegration and error correction model suggest the speed of adjustment. The estimated regression equation is found robust and stable (serial correlation and heteroskedacity tests).  The research shows inflation has short run and long run impact on economic growth so inflation should be kept within its threshold level from sound monetary and fiscal policy mechanism.

scholarly journals Impact of economic growth on international reserve holdings in Brazil

2017 ◽  
Vol 37 (3) ◽  
pp. 605-614 ◽  
Author(s):  
MOHAMMAD KASHIF ◽  
P. SRIDHARAN ◽  
S. THIYAGARAJAN
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Correction Term ◽  
International Reserves ◽  
Speed Of Adjustment ◽  
Error Correction Term ◽  
Long Run ◽  
Short Run ◽  
Using Data ◽  
The Impact

ABSTRACT This study investigated the impact of economic growth on Brazilian international reserves holdings in the context of Error Correction Mechanism using data over the 1980-2014 period. The results reveal that economic growth is highly significant. From the estimation of our model, we argue that economic growth and international reserves have positive long run relationship. Error correction estimates validated our model for error correction term is negative and statistically significant. Besides, our model suggested that economic growth has short run relationship too. The speed of adjustment is more than 40% which indicated that error correction term corrects previous year disequilibrium at the rate of 40.4%.

The Impact of Foreign Aid on Economic Growth in Ethiopia

2020 ◽  
Author(s):  
Belay Asfaw Gebresilassie ◽  
Girma Gezmu Gebre
Keyword(s):  
Economic Growth ◽  
Foreign Aid ◽  
Error Correction ◽  
Negative Impact ◽  
Correction Term ◽  
Annual Data ◽  
Close Monitoring ◽  
Long Run ◽  
Short Run ◽  
The Impact

Abstract This study analyzes the impact of foreign aid on economic growth in Ethiopia based on time series annual data for the period of 1974 to 2017. Autoregressive distributed lag Approach to Co-integration and Error Correction Model was applied in order to investigate the long-run and short-run relationship between dependent and the independent variables. The empirical results from econometrics model reveal that foreign aid has negative impact on economic growth in both long run and short run and statistically significant at 1 percent significant level. The negative and significant error correction term shows that the short run disequilibrium adjusts to its long run equilibrium by 84.6 percent each year. The important policy implication of this study suggests that more effort has to be made to improve the negative impact of foreign aid, mainly because of existence of poor institutional arrangement that contributes the fund to unproductive sectors. The government has to ensure, a close monitoring and consistent management strategies, which is used to avoid misallocation and mismanagement problems and has to ensure that foreign aid is linked to the productive sectors to optimize the benefits.

scholarly journals Bounds Testing Approach to Cointegration: A Re-examination of FDI and Growth in Vietnam

2013 ◽  
Vol 218 ◽  
pp. 94-113
Author(s):  
ANH PHẠM THẾ ◽  
ĐÀO NGUYỄN THỊ HỒNG
Keyword(s):  
Economic Growth ◽  
Small Sample Size ◽  
Small Sample ◽  
Adjustment Process ◽  
Bounds Testing ◽  
Distributed Lag ◽  
Distributed Lag Model ◽  
Long Run ◽  
Short Run ◽  
Lag Model

This study examines the econometric and empirical evidence of both causal and long-run relationship between foreign direct investment (FDI) and economic growth in Vietnam, covering a time span of 21 years from 1991 to 2012. The recent and robust methodology of bounds testing or autoregressive distributed lag model (ARDL) approach to Cointegration is employed for the empirical analysis. This technique can capture both short-run and long-run dynamics of variables, particularly in small sample size cases. The findings indicate the existence of a Cointegration relationship between the two time series and a modest adjustment process from short-run to long-run equilibrium. Further results from Granger causality tests conducted within the error correction model confirm a bi-directional causality between economic growth and FDI over the study period.

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 The relationship between foreign direct investment, financial development and growth economic in Next-11 Countries: a PMG/ARDL estimation

Management ◽  
2021 ◽  
Vol 25 (1) ◽  
pp. 28-50
Author(s):  
Bilal Louail ◽  
Mohamed Salah Zouita
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Estimation Method ◽  
Distributed Lag ◽  
Dynamic Relationship ◽  
Distributed Lag Model ◽  
Long Run ◽  
Short Run ◽  
Lag Model ◽  
The Relationship

Summary This study investigates the relationship between FDI, economic growth and financial development in the Next 11 countries. An analysis of the results was performed accordingly on the panel data gathered from the Next 11 countries from 1985 to 2019— using the Pooled Mean Group (PMG) estimation method and the Autoregressive Distributed Lag model approach (ARDL). The results indicate an impact of both economic growth and financial development on the FDI flows to the study of countries during the period between 1985 and 2019 in the long run, while no such proof is affirmed in the short run. This study’s contribution provides a better understanding of the dynamic relationship between FDI, economic growth, and financial development by providing decision-makers to understand the nature of the dynamic association between the study variables. This study provides empirical evidence about the association between inflows of FDI, economic growth and financial development within the context of the Next-11 countries. The previous literature lacks empirical study on the relationship between variables of study for the Next-11 countries.

scholarly journals Analysis of Indonesian Tax Revenue

2017 ◽  
Vol 1 (01) ◽  
pp. 71
Author(s):  
Amalia Wijayanti ◽  
Firmansyah Firmansyah
Keyword(s):  
Exchange Rate ◽  
Error Correction ◽  
Government Spending ◽  
Inflation Rate ◽  
Correction Term ◽  
Error Correction Model ◽  
Tax Revenue ◽  
Correction Model ◽  
Long Run ◽  
Short Run

<p>This study analyzes the long-run and short-run effect of macroeconomic factors, such as real Gross Domestic Product (GDP), inflation rate, exchange rate and government spending on Indonesia’s tax revenue during 1976-2013, by utilizing the Error Correction Model (ECM). The finding of the study demontrates that in the long-run; the real GDP, exchange rate, and government spending affect Indonesia’s tax revenue, except the inflation rate. In short-run, Indonesia’s tax revenue statisically affected by government spending, while others variable do not influence Indonesia’s tax revenue. Error Correction Term (ECT) coefficient is 0.221, explains incompatibility tax revenue occur in long-run is corrected of 22 percent in one period.</p><p><br />JEL Classification: E01, E20, H20<br />Keywords: Error Correction Model, Macroeconomic, Tax revenue</p>

scholarly journals Effect of Money Supply on Inflation in Nepal: Empirical Evidence from ARDL Bounds Test

2021 ◽  
Vol 2 (1) ◽  
pp. 84-98
Author(s):  
Uttam Lal Joshi
Keyword(s):  
Money Supply ◽  
Correction Term ◽  
Policy Makers ◽  
Ardl Bounds Test ◽  
Long Run ◽  
Short Run ◽  
Bounds Test ◽  
Monetary And Fiscal Policy ◽  
Relationship Of ◽  
The Impact

This study explores the long-run and short-run relationship of money supply and inflation in the context of Nepal. Data are extracted from Economic Survey of Nepal since 1964/65 to 2018/19 to obtain the relationship. ARDL Bounds test is used for cointegration test where the dependent variable is inflation and money supply and Indian inflation are taken as independent variables to estimate the model. Result shows the long-run cointegration between the variables reveals long-run relationship and the error correction term is found to be negative (-0.98) and significant (p=0.02). The study suggests that policy makers can reduce the impact of money supply on inflation and should focus on the control of inflation adopting monetary and fiscal policy mechanism. Creeping inflation in the pace of economic growth is desirable and successful cure of inflation will help in stability and growth of the country.  

scholarly journals The Dynamic Relationship between Tourism and Economy: Evidence from Nepal

2018 ◽  
Vol 5 ◽  
pp. 16-22 ◽  
Author(s):  
Dipendra Karki
Keyword(s):  
Economic Growth ◽  
Real Effective Exchange Rate ◽  
Dynamic Relationship ◽  
Long Run ◽  
International Tourist ◽  
Augmented Dickey Fuller ◽  
Effective Exchange ◽  
Short Run ◽  
Effective Exchange Rate ◽  
Adf Test

The objective of this paper is to analyse the role of tourism in the Nepalese economic growth. I use a trivariate model of real Gross Domestic Product (GDP), international tourist arrivals and real effective exchange rate to investigate the long-run and short-run relationship between tourism and economic growth. The Augmented Dickey-Fuller ( ADF) test is used to determine the order of integration of the series, and I employ the Engle- Granger cointegration procedure to test for the presence of long-run relationship. By using annual macroeconomic data for Nepal for the period of 1962-2011, results reveal that there is a cointegrating relationship between tourism and economic growth.

Causality between VAT and economic growth in Nigeria: An ARDL bounds testing approach

2018 ◽  
Vol 6 (1) ◽  
pp. 55
Author(s):  
Hammed Agboola Yusuf ◽  
Irwan Shah Zainal Abidin ◽  
Normiza Bakar ◽  
Oluwaseyi Hammed Musibau
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Error Correction ◽  
Trade Openness ◽  
Value Added ◽  
Error Correction Model ◽  
Domestic Investment ◽  
Correction Model ◽  
Long Run ◽  
Short Run

Value Added Tax(VAT) is a consumption tax imposed at every stage of consumption level whose burden is burned by final consumer of goods and services. In most developing economies in the world, VAT as a source of revenue to the government that has been notable for its significant role in ensuring economic efficiency. However, VAT revenue has been underutilised in Nigeria due to a high level of corruption in the process of administering the tax. This study examines the impact of VAT, domestic investment and trade openness on economic growth in Nigeria from 1980 to 2016 using ARDL techniques. The research design is time series, and the data were analysed using time series unit root test, error correction model regression, short run and long run ARDL. The result found that VAT, domestic investment and trade openness had a positive and significant impact on real GDP. Also, corruption index is negative also significant in the long run. In the same vein, past value added tax had a negative and weak significant impact on real gross domestic product indicating convergence to long-run causality between economic growths and VAT and economic growth. The Error Correction Model (ECM (-1)) coefficient had a negative and statistically significant sign. This shows that 39 percent can quickly correct short-run deviation. The study, therefore,  recommends that tax administrative loopholes should be plugged for tax revenue to contribute immensely to the development of the economy since past VAT had a significant impact on economic growth.

Infrastructure Investment and Economic Growth: Evidence from India

2016 ◽  
Vol 17 (1) ◽  
pp. 90-111
Author(s):  
Naliniprava Tripathy ◽  
Maram Srikanth ◽  
Lagesh Aravalath
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Error Correction ◽  
Capital Formation ◽  
Domestic Product ◽  
Government Revenue ◽  
Indian Economy ◽  
Long Run ◽  
Domestic Capital ◽  
Short Run

This study examines the long-run and short-run relationship between investment in infrastructure and economic growth in the Indian economy by using Auto Regressive Distributed Lag Model, Error Correction Model, and Granger Causality Test. The study reports that there is no short-run relationship among gross domestic product, gross domestic capital formation, revenue of the governmentand exports. However, the study finds that unidirectional causality exists between employment and gross domestic product; gross domestic productandinflation. It implies that employmentlevel in organised sector and inflationinfluence the economic growth in India for a short period. The study finds that there is a long-run relation exists between economic growth, domestic investment, inflation and government revenue. Therefore, emphasis should be placed on capital formation, government income and inflation to accelerate growth and development in the Indian economy. The error correction term is indicating that long term relationship is stable and any disequilibrium created in short termwill be temporary and will correct over a period. However, it is suggested to maintain balance among inflation,gross domestic product, employment, exports, savings, investment and government revenue to keep an economy growing. These findings have important policy implications since an economy built on investment in infrastructural development.

Sign in / Sign up

Export Citation Format

Share Document