scholarly journals Does Government Expenditure Reduce GDP Gap? Evidence from Bangladesh

2007 ◽  
Vol 3 (1) ◽  
pp. 1-8
Author(s):  
M. Rafiqul Islam ◽  
A.F.M. Kamrul Hassan
Keyword(s):  
Fiscal Policy ◽  
Dominant Role ◽  
Government Expenditure ◽  
Equilibrium Path ◽  
Role Of Government ◽  
Business Studies ◽  
Long Run ◽  
Short Run ◽  
Gdp Gap ◽  
Long Run Equilibrium

In Keynesian macroeconomics fiscal policy plays the dominant role to steer the economy along its long run equilibrium path and also to cure the short run deviation from its long run level. Present paper examines this role of government expenditure, a tool of fiscal policy, in the context of the economy of Bangladesh. The paper employs cointegration and Error Correction Mechanism (ECM) to examine the short and long run relationship between economic growth and government expenditure. Findings of the study indicate that, in the short run, government expenditure does not play any statistically significant role in eliminating the gap between actual and potential output. However, a statistically significant cointegrating relationship is found between government expenditure and long run equilibrium output Journal of Nepalese Business Studies 2006/III/1 pp. 1-8

scholarly journals Determinants of fiscal policy behavior in Nigeria

2019 ◽  
Vol 16 (2) ◽  
pp. 1-13 ◽  
Author(s):  
Patrick Ologbenla
Keyword(s):  
Fiscal Policy ◽  
Government Expenditure ◽  
Commodity Price ◽  
Oil Price ◽  
Annual Data ◽  
Government Revenue ◽  
Long Run ◽  
Short Run ◽  
Fiscal Behavior ◽  
Policy Behavior

The study investigated the factors that determine fiscal behavior in Nigeria. The vulnerability of fiscal policy framework in Nigeria to different shocks and the attendant effects on the behavior of fiscal policy are parts of the reasons that prompted this research work. Annual data between 1980 and 2015 on core fiscal variables such as government revenue, government expenditure, fiscal balance, public debt, as well as other variables such as oil price, exchange rate, and inflation rate commodity price among others, are used. The Auto-Regressive Distributed Lag ARDL estimating technique is used to analyze both the long-run and short-run effects of these variables on fiscal behavior in Nigeria. Findings from the study show that fiscal policy in Nigeria is highly vulnerable to shocks from these variables mostly in the short run. Notwithstanding, variables like government revenue, government expenditure, regime of administration, oil price and commodity price volatilities all have sustained effects till the long-run periods. It was discovered that oil price movements is not the only external factor that has pronounced effects on fiscal behavior, but commodity prices volatility generally constitutes an important influential factor in determination of fiscal policy behavior in Nigeria.

scholarly journals Government Expenditure and Tax Revenue, Causality and Cointegration: The Experience of Pakistan (1972-2007).

2009 ◽  
Vol 48 (4II) ◽  
pp. 951-959 ◽  
Author(s):  
Zinaz Aisha ◽  
Samina Khatoon
Keyword(s):  
Fiscal Policy ◽  
Granger Causality ◽  
Government Expenditure ◽  
Economic Consequences ◽  
Government Expenditures ◽  
Tax Revenue ◽  
Causality Test ◽  
Long Run ◽  
Short Run ◽  
Tax Hypothesis

This paper establishes empirically the causal relationship and long run relationship between government expenditures and government revenues for the case of Pakistan from 1972 to 2007. Fiscal policy, a short run issue, but that can have testing macro economic consequences. Fiscal policy is viewed as an instrument to mitigate short run fluctuations. In this paper we examine tax/spend or spend/tax hypothesis. For this purpose, bi-directional Granger causality will be applied for instance flow from government expenditure to revenue or revenue to government expenditure. This issue has been concerned with intretemporal relationship between revenue and expenditure, so to check long run relationship Engel Granger cointegration will be used. For checking data stationary, non stationary unit root, and ADF/DF approaches give the proof for this hypothesis. The results show the presence of co-integration between government expenditure and tax revenue variables implying evidence of a stable long-run relationship between them. The Granger Causality test suggest the unidirectional causality flow from government expenditure to tax revenue. Keywords: Government Expenditures, Government Revenues, Granger Causality, Stationary, Co-integration

scholarly journals The Effect of Fiscal Policy on Capital Flight in Namibia

2019 ◽  
Vol 11 (4(J)) ◽  
pp. 18-31
Author(s):  
Valdemar J. Undji ◽  
Teresia Kaulihowa
Keyword(s):  
Fiscal Policy ◽  
Government Expenditure ◽  
Capital Flight ◽  
Tax Rates ◽  
Financial Deepening ◽  
Macroeconomic Factors ◽  
Policy Interventions ◽  
Long Run ◽  
Short Run ◽  
Bound Test

The occurrences of capital flight continue to be of great concern for many developing countries and Namibia is not an exception to this. This study aimed at examining the effect of fiscal policy on capital flight in Namibia for the period, 2009-2018. To assess this, the Auto-Regressive Distributive Lag (ARDL) bound test to cointegration technique was employed. The finding revealed that there is a long-run relationship between the selected macroeconomic factors and capital flight. In particular in the long-run government expenditure and its interaction with debt stock are found to positively affect capital flight. In the short-run however, past capital flight, previous period tax rates, previous external debt, current debt stock, previous inflation rate, as well as previous financial deepening were found to bear a positive effect on capital flight. Estimate of capital flight using the residual approach shows that Namibia lost about N$ 42 billion in 9 years through capital flight. This means on average Namibia lost close to N$ 5 billion in capital flight. These empirical findings, call for serious policy interventions in order to minimize and contain the issue of capital flight in the country.

scholarly journals Domestic consumption and uncertainty of exchange rate in a Monetary union: Evidence from the Euro area

2021 ◽  
Vol 18 (1) ◽  
pp. 151-172
Author(s):  
Samuel Okafor ◽  
Juste Lokossou
Keyword(s):  
Exchange Rate ◽  
Monetary Union ◽  
Correction Coefficient ◽  
Equilibrium Path ◽  
Exchange Rate Uncertainty ◽  
Euro Zone ◽  
Pooled Mean Group ◽  
Long Run ◽  
Short Run ◽  
Long Run Equilibrium

The research seeks to uncover how real consumption reacts to real exchange rate uncertainty in the short and long run for the world's largest monetary union the Euro zone. Twelve Euro zone countries were sampled covering the period 1995Q1-2019Q4. Using generalized autoregressive conditional heteroskedasticity (GARCH) and pooled mean group (PMG), the result shows that exchange rate uncertainty significantly dampens long-run consumption while the short-run effect is mixed. In the benchmark model, a negative and significant error correction coefficient was obtained, which allows to argue that i) there is evidence of a return to the long-run equilibrium path for consumption following short run deviations and ii) the speed of adjustment to equilibrium is low, with a coefficient of ~ 4%. This suggests that, in the Euro zone, convergence to long-run equilibrium is slow, as the proportion of disequilibrium corrected in one quarter, following a shock, is about 4%, which implies it would take ~17 quarters for one half of the disequilibrium, or deviations from the long-run consumption path to become corrected.

scholarly journals An econometric analysis of the effectiveness of fiscal and monetary policies in India

2021 ◽  
Author(s):  
Anand Nadar
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Fiscal Policy ◽  
Government Expenditure ◽  
Series Data ◽  
Monetary Policies ◽  
Long Run ◽  
Development Indicator ◽  
Short Run ◽  
Bound Test

This study investigate the effectiveness of fiscal policy and monetary policy in India. We collected thetime series data for India ranging from 1960 to 2019 from World Development Indicator (WDI). Weapplied the bound test to check the long-run relationship between fiscal policy, monetary policy andeconomic growth. The short-run and long-run effects of fiscal policy and monetary policy have beenestimated using ARDL models. The results showed that there is a long-run relationship between fiscaland monetary policies with economic growth. The estimated short-run coefficients indicated that afew immediate short run impact of fiscal and monetary policies are insignificant. However, the shortrun impacts become significant as time passes. The long-run results suggested that the long-runimpact of both fiscal and monetary policies on economic growth are positive and significant. Morespecifically, the GDP level increases if the money supply and government expenditure increase(Expansionary fiscal and monetary policies). On the other hand, the GDP level decrease if the moneysupply and government expenditure decrease (contractionary fiscal and monetary policies).Therefore, this study recommend to use expansionary policies to spur the Indian economy.

ATTAINMENT OF HIGHER ENROLLMENT RATES IN PAKISTAN: A MACROECONOMIC AND ECONOMETRIC STUDY

2012 ◽  
Vol 01 (07) ◽  
pp. 17-29
Author(s):  
Furrukh Bashir ◽  
Shahbaz Nawaz ◽  
Rahat Ullah ◽  
Muhammad Ramzan Arshad ◽  
Munwar Bagum ◽  
...  
Keyword(s):  
Labor Force ◽  
Health Expenditure ◽  
Price Index ◽  
Consumer Price Index ◽  
Government Expenditure ◽  
Government Revenue ◽  
Long Run ◽  
University Enrollment ◽  
Enrollment Rates ◽  
Short Run

Education is always considered as the major determinant for the development of any economy. Enrollment at various levels also shows that how much education is common within the citizens of the country. Considering the importance of enrollment, the current study examines the influence of some macroeconomic variables on various levels i.e. primary, secondary, higher, college, professional and university enrollment in Pakistan. Time series data has been gathered on consumer price index, government revenue, employed labor force, government expenditure, and health expenditure for the period from 1972 to 2010. For long run estimates, Johansen Co integration test is used and short run estimates are taken through error correction model. The results of the study exhibit positive association of employed labor force, government expenditure and health expenditure with primary, secondary, higher, college, professional and university enrollment in Pakistan. On the other side, consumer price index and government revenue have been found to be inversely influencing enrollment at various levels. Short run results are also much favorable for the economy and reveals convergence towards long run equilibrium due to any disturbances in the short run period. At the end study gives some policy implications that government should decrease consumer price index and tax rate and to increase government expenditure in terms of education and health for higher enrollment rates in Pakistan.

scholarly journals A Short Note on Discrimination and Favoritism in the Labor Market

2017 ◽  
Vol 17 (1) ◽  
Author(s):  
Nicolas Salamanca ◽  
Jan Feld
Keyword(s):  
Labor Market ◽  
Wage Differentials ◽  
Short Note ◽  
Market Forces ◽  
Long Run ◽  
Short Run ◽  
Relative Preferences ◽  
Long Run Equilibrium

AbstractWe extend Becker’s model of discrimination by allowing firms to have discriminatory and favoring preferences simultaneously. We draw the two-preference parallel for the marginal firm, illustrate the implications for wage differentials, and consider the implied long-run equilibrium. In the short-run, wage differentials depend on relative preferences. However, in the long-run, market forces drive out discriminatory but not favoring firms.

scholarly journals Investigating Gold Investment as an Inflationary Hedge

2018 ◽  
Vol 7 (1) ◽  
pp. 30-41 ◽  
Author(s):  
Narinder Pal Singh ◽  
Navneet Joshi
Keyword(s):  
Consumer Price Index ◽  
Wald Test ◽  
Indian Culture ◽  
Vector Error Correction ◽  
Fund Managers ◽  
Vector Error ◽  
Long Run ◽  
Short Run ◽  
Portfolio Managers ◽  
Long Run Equilibrium

Gold and Indian culture have been sharing an age-old association. India is one of the top two consumers of gold. Gold is the most popular investment avenue because of its ability to provide liquidity. The average monthly price however has grown by 1,588 percent over the whole period from 1979 to 2017 (June). In this article, we intend to investigate gold as an investment to hedge against inflation. The sample period to study the relationship between gold and inflation is 2011–2017 (March). To analyze long-run equilibrium between gold and inflation (consumer price index [CPI]), Johansen’s cointegration approach has been used. The short- and long-run causality between gold and inflation has been studied using vector error correction model (VECM) and Wald test. The results of cointegration indicate that gold and CPI series are cointegrated and bear long-run equilibrium. Both VECM and Wald test results indicate that there is only long-run causality between CPI and gold prices. However, in short run these variables do not show any causality. Thus, we infer that gold investment can be used as hedge against Inflation. The findings of this research have got direct implications for retail investors, portfolio managers, treasury and fund managers, government, and commercial traders.

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