scholarly journals Infrastructure Development and Economic Growth in Nepal

2020 ◽  
Vol 23 (2) ◽  
pp. 131-144
Author(s):  
Bashu Dev Dhungel
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Tertiary Education ◽  
Correction Term ◽  
Percent Level ◽  
Infrastructure Development ◽  
Error Correction Term ◽  
Stable Relationship ◽  
Active Population ◽  
Long Run

This article, on infrastructure development and economic growth in Nepal, focuses on the infrastructure development that seems to affect economic growth in Nepal during the study period 1994-2018. To investigate the casual relationship between infrastructure development and the economic growth, this study has employed Engel-Granger cointegration test and Error Correction Mechanism (ECM) model. The results showed a cointegration and a stable relationship between gross domestic product and infrastructure variables—such as total length of road, percentage of economically active population, percentage of tertiary education enrollment, and gross capital formation. In addition, the coefficient of Error Correction term was -0.88—signifying about 88 percent adjustments towards equilibrium, confirmed by the occurrence of a stable long-run relationship among the variables. The sign of Error correction term (Ect) became negative and statistically significant at the 1 percent level, indicating the possibility of convergence towards equilibrium in each period with adjustment captured by difference terms. This study has its implication for policymakers to raise economic growth through infrastructure development. The expansion of infrastructure network leads to the enhancement of efficiency and competitive market, and the acceleration of the economic growth within the country.

scholarly journals Impact of Government Expenditure in Economic Growth of Nepal: ARDL Approach

2019 ◽  
Vol 3 (1) ◽  
pp. 33-40
Author(s):  
Keshar Bahadur Kunwar
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Unit Root ◽  
Public Expenditure ◽  
Correction Term ◽  
Percent Level ◽  
Series Data ◽  
Error Correction Term ◽  
Long Run ◽  
Lm Test

Public expenditure refers to the expenditure made by public authority, i.e., central government and other local bodies to carter the demand of the people. It is for protecting the citizens and for promoting their economic and social welfare. Public expenditure is one of the instruments through which government influence economic events. The specific objective of this paper is to analyze the long run and short run relationship between public expenditure and economic growth in Nepal and to examine the Causal relationship between the public expenditure and economic growth in Nepal. The study employed quantitative techniques and econometrics methods to analyze the data. This study used time series data. Data analysis begins with the testing of the unit root of the series to confirm whether the data are stationary or not. Augmented Dicky Fuller unit root test, co-integration test is employed to check the relationship of the variables under study. One period lagged LNGE has significant and positive impact on RGDP. If 1 percent increase in GE leads to increase by 34.99 percent in RGDP at 5 percent level of significance. The coefficient of error correction term (-0.782018) is significant at one percent level. Highly significant negative sign of the error correction term strengthens the presence of long-run relationship among the variables. However, the speed of adjustment from previous year’s disequilibrium in RGDP added to current year’s equilibrium is only 78.20 percent. The P-value of Breusch-Godfrey serial Correlation LM Test, Heteroscedasticity test: Breusch-Pagan-Godfrey and normality test is greater than 5 percent which is desirable. So, this model is free from auto correlation and heteroscedasticity. The residual is normally distributed.

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%.

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.

Rail Transport and Economic Growth in Nigeria (1970 – 2011).

2013 ◽  
Vol 03 (05) ◽  
pp. 18-24
Author(s):  
APANISILE Olumuyiwa Tolulope ◽  
AKINLO Taiwo
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Inverse Relationship ◽  
Correction Term ◽  
Rail Transport ◽  
Long Run ◽  
Development Policies ◽  
Full Capacity ◽  
The Government ◽  
Modelling Approach

The study examined the link between rail transport and economic growth in Nigeria over the period 1970-2011 using Error Correction modelling approach. The results show that there is long run relationship among the variables. In addition, the EC models show that the error correction term is correctly signed and significant while there is inverse relationship between rail transport and economic growth in Nigeria. This explains the decadence in the sector due to the neglect of the sector by the government. The study therefore concludes that government should embark on development policies that will aim at strengthening the sub-sector of the economy so that it can operate in its full capacity and neutralise the decadence that is evident in the sector.

scholarly journals Dynamic Effects of U.S. Budget Deficit and Labor Productivity - Real Wage Gap On Stock Market Performance

1970 ◽  
Vol 32 (1) ◽  
pp. 55-69
Author(s):  
Matiur Rahman ◽  
Muhammad Mustafa
Keyword(s):  
Stock Market ◽  
Error Correction ◽  
Labor Productivity ◽  
Real Wage ◽  
Budget Deficit ◽  
Wage Gap ◽  
Correction Term ◽  
Dynamic Effects ◽  
Error Correction Term ◽  
Long Run

This paper investigates the dynamic effects of annual U.S budget deficit as aratio of GDP and labor productivity-real wage gap on US stock market performance.The sample period runs from 1950 through 2012. The standard cointegration methodologyis appropriately applied. All the aforementioned variables are nonstationaryin levels revealing I(1) behavior. The coefficient of the error-correction term of thevector error-correction model (VECM) has expected negative sign with statisticalsignificance confirming long-run unidirectional causality stemming from the independentvariables to the stock market return. However, the speed of adjustment towardsa long-run equilibrium is slow as reflected in the low numerical coefficientof the error-correction term. The evidences on short-run interactive feedback effectsare also very weak.

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 Contribution of Agriculture Sector in Economic Growth of Pakistan: An Empirical Analysis

2021 ◽  
Vol 5 (2) ◽  
pp. 103-120
Author(s):  
Sumia Bint Zaman ◽  
Muhammad Ishaq ◽  
Muhammad Azam Niazi
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Time Series Data ◽  
Positive Impact ◽  
Correction Term ◽  
Value Added ◽  
Series Data ◽  
Agriculture Sector ◽  
Real Gdp ◽  
Long Run

There has been controversy in the field of development economics about the significance of the role of agriculture sector in economic growth. Going through the data, it indicates that agriculture sector is significant contributor to the economy of Pakistan as it contributes about 19% in national GDP. This study was designed to statistically test the contribution of agriculture sector in economic growth of Pakistan through estimation of relationship between agriculture sector and Pakistan’s economic growth using Autoregressive Distributed Lag (ARDL) bounds test and Error Correction Model (ECM). Time series data on selected variables was utilized from 1961-2018. Study found that real agricultural value added has a significant positive impact on real GDP per capita in the long-run where one percent increase in real agricultural value added increases the real GDP/capita by 0.35%. This indicated that the promotion of agriculture sector leaves far reaching effects with respect to economic growth of the country. These results advocated for the development of agriculture sector in line with the long-term goals of economic growth and emphasized in investing in agriculture sector. Coefficient of error correction term (ECT) is -0.62 meaning that if there is any disequilibrium, it will restore @ 62 percent in the first period. Results also proved the importance of capital formation both the physical capital and human capital. Finding suggested that we should investment in human health to enhance the economic growth as suggested by exogenous growth theory. Moreover, it can also be suggested to create conducive environment and economic opportunities to reap the benefits of demographic dividends of decreased mortality in the long-run. As per analysis, maintaining stability is critically important for economic growth. Moreover, literature hypothesize the positive effect of TOT for economic growth, but analysis indicated that TOT has not been able to put any significant impact on economic growth. Further, trend analysis also pointed out that TOT has been fluctuating over the time. It can be inferred from the analysis that there is need to stabilize TOT and restructure the exports of the country to generate the significant positive impact.

scholarly journals The Impact of Industrialization, Trade Openness, Financial Development, and Energy Consumption on Economic Growth in Indonesia

Economies ◽  
2021 ◽  
Vol 9 (4) ◽  
pp. 174
Author(s):  
Khalid Eltayeb Elfaki ◽  
Rossanto Dwi Handoyo ◽  
Kabiru Hannafi Ibrahim
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Least Squares ◽  
Financial Development ◽  
Correction Term ◽  
Trade Openness ◽  
Ordinary Least Squares ◽  
Distributed Lag ◽  
Long Run ◽  
The Impact

This study aimed to scrutinize the impact of financial development, energy consumption, industrialization, and trade openness on economic growth in Indonesia over the period 1984–2018. To do so, the study employed the autoregressive distributed lag (ARDL) model to estimate the long-run and short-run nexus among the variables. Furthermore, fully modified ordinary least squares (FMOLS), dynamic least squares (DOLS), and canonical cointegrating regression (CCR) were used for a more robust examination of the empirical findings. The result of cointegration confirms the presence of cointegration among the variables. Findings from the ARDL indicate that industrialization, energy consumption, and financial development (measured by domestic credit) positively influence economic growth in the long run. However, financial development (measured by money supply) and trade openness demonstrate a negative effect on economic growth. The positive nexus among industrialization, financial development, energy consumption, and economic growth explains that these variables were stimulating growth in Indonesia. The error correction term indicates a 68% annual adjustment from any deviation in the previous period’s long-run equilibrium economic growth. These findings provide a strong testimony that industrialization and financial development are key to sustained long-run economic growth in Indonesia.

scholarly journals The impact of education tax and investment in human capital on economic growth in Nigeria

2020 ◽  
Vol 3 (2) ◽  
pp. 77-86
Author(s):  
Abubakar Aminu ◽  
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Tertiary Education ◽  
Distributed Lag ◽  
Distributed Lag Model ◽  
Long Run ◽  
Lag Model ◽  
The Government ◽  
Capital Development ◽  
The Impact

This paper investigated the impact of education tax and investment in human capital on economic growth in Nigeria utilizing the Non-Linear Autoregressive Distributed Lag Model of cointegration covering the period of 25 years from 1995 to 2019. The findings reveal that education tax and investment in human capital have positive and significant effect on the growth of the Nigerian economy over the sampled period. The paper recommends that in order to boost the economy, Nigeria would need to, among other policy frameworks, provide a suitable environment for ensuring macro-economic stability through effective utilization of income from education tax that will encourage increased investment in human capital in the public sector. In addition to income from education tax, for effective and speedy economic growth and development in Nigeria, the government, beneficiaries (students/parents), employers of labor and other stakeholders in the society should share the responsibility for financing primary, secondary and tertiary education, so as to provide a solid foundation for human capital development. However, as revealed in this paper, the contribution of education tax and investment in human capital is most likely to be realized over a long-run period than in the short term. Keywords: Education Tax; Investment; Human capital; Economic growth

scholarly journals Dampak Minyak Dunia, Energi Terbarukan, dan Kebijakan Moneter Terhadap Laju Pertumbuhan Ekonomi di Indonesia Tahun 1987-2019

2021 ◽  
Vol 2021 (1) ◽  
pp. 536-546
Author(s):  
Andi Nur Fauziyah Syafriany ◽  
Ika Yuni Wulansari
Keyword(s):  
Error Correction ◽  
Correction Term ◽  
Error Correction Term ◽  
Error Correction Mechanism ◽  
Us Dollar

Salah satu indikator yang bisa digunakan untuk mengetahui kemajuan suatu negara bisa dengan menggunakan indikator laju pertumbuhan ekonomi. Indonesia sebagai salah satu negara yang sedang berkembang memiliki laju pertumbuhan ekonomi yang mengalami fluktuasi dari tahun ke tahun. Hal ini bisa dipengaruhi oleh beberapa faktor dari berbagai aspek kehidupan seperti energi, faktor produksi, dan moneter. Oleh karena itu, penelitian ini bertujuan untuk mengetahui gambaran laju pertumbuhan ekonomi Indonesia 1987-2019 dan faktor-faktor yang memengaruhi laju pertumbuhan ekonomi Indonesia dalam jangka panjang dan jangka pendek. Penelitian ini menggunakan metode Error Correction Mechanism. Hasil penelitian menunjukkan bahwa produksi minyak dunia, nilai tukar Rupiah terhadap US Dollar, dan suku bunga berpengaruh signifikan terhadap laju pertumbuhan ekonomi Indonesia dalam jangka panjang. Selain itu, persentase Pembentukan Modal Tetap Bruto terhadap total PDB pengeluaran Indonesia, nilai tukar Rupiah ke US Dollar, suku bunga, dan Error Correction Term (ECT) berpengaruh signifikan terhadap laju pertumbuhan ekonomi Indonesia dalam jangka pendek.

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