Trade Deficit in Nepal: Relationship between Trade Deficit and Budget Deficits

2020 ◽  
Vol 10 ◽  
pp. 95-108
Author(s):  
Khom Raj Karel ◽  
Suman Kharel
Keyword(s):  
Foreign Trade ◽  
Budget Deficit ◽  
Trade Deficit ◽  
Budget Deficits ◽  
Simple Linear Regression ◽  
Huge Amount ◽  
Growth Trend ◽  
Strong Positive Relationship ◽  
The Government ◽  
India And China

Nepal has bitter experiences of trade deficit; it has become the tradition of the country. The trade deficit of Nepal has been widening since the decades. The statistical data shows that around 80 percent of imports are from India and China. The growth trend of foreign trade has been increasing in different years after year with a huge amount of trade deficit. As the size of foreign trade increased the trade deficit of Nepal has-been increasing as well. The government of Nepal has been announcing the deficit budget. This study focused to analyze the trends of trade deficit of Nepal and observing the relations of trade deficit and budget deficit. Simple statistical tools are applied to analyze the trend and growth of foreign trade of Nepal and correlation and simple linear regression model has been used to examine the linkages between trade deficit and budget deficit of Nepal. The study has found a strong positive relationship between trade deficit and budget deficit of Nepal. As result, there is a significant impact of budget deficit on trade deficit. The finding of the regression analysis indicates that budget deficit is a significant predictor of trade deficit.

Determinants of Budget Deficit in Nigeria

2021 ◽  
Vol 6 (1) ◽  
pp. 1
Author(s):  
Maimuna M Shehu ◽  
Ibrahim M Adamu
Keyword(s):  
Budget Deficit ◽  
Budget Deficits ◽  
Cointegrating Vector ◽  
Long Run ◽  
Johansen Cointegration ◽  
Short Run ◽  
Johansen Cointegration Test ◽  
The Government ◽  
One Year ◽  
High Level

This paper investigates the factors governing the determination of budget deficit in Nigeria from 1981q1 through 2016q4. Our methodology is based on Johansen cointegration and Vector Error Correction model (VECM) approach. The result from the Johansen cointegration test suggests one cointegrating vector, which indicates the existence of a long run cointegrating relationship. Evidence from the long run and short run parameters suggest that exchange rate, interest rate and one year lag of budget deficit are the major determinants of budget deficit. Therefore, to achieve a realistic fiscal surplus, the government should determine a high level of accountability in its fiscal operations. In addition, any fiscal surplus should be channeled into productive investments to diversify the economy and reduce the likelihood of potential budget deficits.

A Comparative Study of the Central Administration Budget Preparation Process in Turkey and Sweden

2017 ◽  
pp. 1-14
Author(s):  
Fatma Turna ◽  
Nihan Kurtulmaz ◽  
Burak Kozali
Keyword(s):  
Public Sector ◽  
Comparative Study ◽  
Budget Deficit ◽  
Budget Process ◽  
Preparation Process ◽  
Budget Deficits ◽  
Central Administration ◽  
The Government ◽  
Budget Surplus

Sweden was one of the countries among the OECD states yielding maximum budget surplus at the end of 1980s and became one of the countries yielding maximum budget deficits in the first years of the 1990s. The budget deficit almost doubled in five years. During that period, the government decided the most important reason of the budget deficits was the budget process itself and commenced studies to reform the budget process and enhance its consistency and reliability. Basic steps were taken to grant budget surplus for whole public sector, to set an allowance cap for whole public sector and create equivalent budget structure for all municipalities and a series of studies were conducted. In this study, the stage of the budget preparation process in Turkey and Sweden will be reviewed and compared to the budget preparation process in Sweden with the budget preparation process in Turkey.

scholarly journals Do Budget Deficit Crowds Out Private Investment: A Case of Tanzanian Economy

2016 ◽  
Vol 11 (6) ◽  
pp. 183
Author(s):  
Samwel Mwigeka
Keyword(s):  
Budget Deficit ◽  
Private Investment ◽  
Annual Data ◽  
Budget Deficits ◽  
Vector Error Correction ◽  
Study Results ◽  
High Government ◽  
Johansen Cointegration Test ◽  
The Government ◽  
Private Investors

The existing high budget deficit in Tanzanian economy has created an immense concern among economic policy analysts. The study inspects whether budget deficits crowd out or crowd in private investment in Tanzania, using annual data for the period from 1970 to 2012. Using the Johansen cointegration test advocates there is at least one cointegration vector among these variables. Given such condition, the application vector error correction model (VEC) became inevitable as it presents additional and superior information in relation to other data production processes. The results indicate a close long–term connection between private investment, and other variables included in the study. Results suggest that budget deficits considerably crowds out private investment. The study advocates that government should readdress its fiscal policy that would support the private investors. The government should discourage high government expenditures and maintaining a low fiscal deficit also capital market should be used to finance budget deficit.

Fiscal Policy in Europe

2007 ◽  
Vol 201 ◽  
pp. 33-36 ◽  
Author(s):  
Ray J Barrell ◽  
Sylvia Gottschalk
Keyword(s):  
Budget Deficit ◽  
Stochastic Simulations ◽  
Forecast Errors ◽  
Budget Deficits ◽  
Government Budget ◽  
The Past ◽  
Large Numbers ◽  
The Difference ◽  
The Government ◽  
One Year

In the past twelve months the government budget situation in Germany has improved markedly, and the budget deficit has moved from 3.2 per cent of GDP in 2005 to 1.7 per cent in 2006, with further improvements in prospect. Over the same period in France, the budget deficit moved marginally from 3 per cent of GDP in 2005 to 2.5 per cent of GDP in 2006. The prospects for further improvement appear limited as the new government plans to cut taxes to stimulate the economy. Projections for budget deficits are very uncertain, as they are the difference between two large numbers (receipts and spending) that are difficult to predict accurately. Figures 1 and 2 plot the errors around our budget projections for France and Germany based on stochastic simulations on NiGEM. The 95 per cent confidence limit for our forecast one year ahead is around 1 per cent of GDP around our central forecast, and uncertainty increases into the future. As we can see from figures 3 and 4, our forecast errors for France and Germany have been well within the 95 per cent bands in the past three years, except for our one year ahead forecast for Germany for 2006. The budget improved by 1.5 per cent of GDP more than we had anticipated, and this appears to have been due to unexpectedly high tax receipts, rather than to changed policy.

scholarly journals Twin Deficit and the Macroeconomic variables in Kenya

2014 ◽  
Vol 2 (9) ◽  
pp. 64-85
Author(s):  
Kennedy O Osoro ◽  
Seth O Gor ◽  
Mary L Mbithi
Keyword(s):  
Interest Rates ◽  
Current Account ◽  
Budget Deficit ◽  
Current Account Deficit ◽  
Empirical Relationship ◽  
Trade Deficit ◽  
Current Account Balance ◽  
Budget Deficits ◽  
Domestic Investment ◽  
Macroeconomic Variables

The purpose of this paper is to test the twin deficit hypothesis and empirical relationship between current account balance and budget deficit while including other important macroeconomic variables such as growth, interest rates, money supply (M3) in Kenya from 1963-2012. The study was based on co integration analysis and error correction model (ECM). The results reveal a long-run association between the trade deficit and the fiscal deficit. The findings indicate that the Keynesian view fits well for Kenya since the causality runs from budget deficit to current account deficit. We detected unidirectional causation between the twin deficits, running from budget deficit to current account directly and indirectly through budget deficits which raise real interest rates, crowd out domestic investment, and cause the currency to appreciate in relation to the other currencies and further deteriorates the current account deficit.

scholarly journals Ṣukūk: A Sharīʿah Compliant Tool for Financing Budget Deficits

2019 ◽  
Vol 32 (1) ◽  
pp. 119-124
Author(s):  
Omar Zuhair Hafiz Omar Zuhair Hafiz
Keyword(s):  
Economic Growth ◽  
Economic Activity ◽  
Budget Deficit ◽  
Negative Relationship ◽  
Budget Deficits ◽  
International Debt ◽  
Key Variables ◽  
The Government ◽  
The Impact ◽  
The Relationship

The lead paper (Pettifor, 2019) discusses an important issue at the macroeconomic level, especially the impact of financing government’s expansionary budget deficit through borrowing. The paper reiterates that claiming that the use of loans to finance the deficit will lead to a decline in the economic activity and will in turn increase the deficit, is a common misconception. In fact, the data on the British economy over a period of a hundred years, as shown in the lead paper, proves that there is a positive relationship between the volume of the budget deficit (and public debt) and economic activity. This, in turn, lead to a decrease in unemployment and thus, eventually contributed to a reduction in the budget deficit. These results have been proven by other researches as well as I have mentioned in this paper. I have also pointed to other researches which indicate that there is a negative relationship between the size of the debt (or the budget deficit), and economic activity, which contradicts the hypothesis of the lead paper. In this brief comment on the lead paper, I also discuss the fact that the global debt phenomenon has become a burning issue. I present a summary of the state of international debt around the world and discuss its impact on the economies of many countries that repay their debts in hard currencies. I argue that this situation must be taken into consideration when discussing the impact of borrowing to finance the government budget deficit to stimulate economic growth. I also propose that these effects on the borrowing economies should also be analyzed in the event that these international loans are in the form of Islamic instruments (ṣukūk) which are increasingly being used by some governments as a tool to finance their budget deficits, especially among the OIC countries. However, because it is a modern financing tool, several years need to pass before we can viably test the relationship between them and economic growth and the extent of their impact on key variables at the macro level of the economy.

scholarly journals Macroeconomic Fundamentals and Budget Deficit Nexus: Evidence from a Developing Economy

2021 ◽  
Vol 12 (4) ◽  
pp. 152
Author(s):  
Gbenga Peter Sanusi
Keyword(s):  
Error Correction ◽  
Budget Deficit ◽  
Correction Term ◽  
National Income ◽  
Error Correction Model ◽  
Macroeconomic Fluctuations ◽  
Budget Deficits ◽  
Correction Model ◽  
Macroeconomic Fundamentals ◽  
The Government

The increasing budget deficit of the Nigeria’s government in the past few decades with its attendance impact on the economy is worrisome. This study examines the impacts of macroeconomic fundamentals on Nigeria’s fiscal deficit. An error correction model was specified and estimated. In terms of sign and size, the result showed that, there is an inverse relationship between budget deficit and the external reserve. This implies that an increase in the external reserve, leads to a decrease in budget deficits. A unit increase in external reserves resulted in 12.4 percent fall in budget deficit. In contrast, however, national income and interest rate showed a positive relationship with budget deficit. Increase in income expands the potential and propensity to spend. Lenders are equally more disposed to lend to the government because of the presupposed economic prosperity. The lagged value of the error correction term has the expected inverse sign of -0.42, and highly significant. The negative value of the error correction model further supports the co-integration relationship among the variables. Thus, macroeconomic variables influence budget deficits. Economic policies which minimizes macroeconomic fluctuations is paramount in curbing the negative impacts of increasing government deficit in the economy.   Received: 2 May 2021 / Accepted: 15 June 2021 / Published: 8 July 2021

scholarly journals Pattern of Foreign Trade in Nepal

2020 ◽  
Vol 35 (1) ◽  
pp. 163-180
Author(s):  
Sadan Kumar Bhagat
Keyword(s):  
Foreign Trade ◽  
Secondary Data ◽  
Trade Deficit ◽  
Petroleum Products ◽  
Primary Data ◽  
Fiscal Year ◽  
Foreign Countries ◽  
Physical Infrastructure ◽  
Transport Problems ◽  
India And China

Most of the countries in the world strengthen their economic and political power with the help of foreign trade and it is advantageous for both importing and exporting countries. The situation of foreign trade is not good in Nepal. Nepal has imported almost 15 times greater than its export amount in Fiscal Year 2018/19.The import amount of only petroleum products was 2.62 times greater than its total export amount. The major contributors of foreign trade were India and China which covered 64.70 percent and 13.70 percent market share respectively during FY 2018/19. The objectives of this study were to examine the situation of foreign trade in Nepal, to highlight its positive aspects and to analyze the problems along with some measures to resolve the problems. To examine the situation of foreign trade in Nepal secondary data have been collected from government publications and analyzed after presenting in tables. Likewise, a cross-section of 50 respondents from various cities have been interviewed to collect primary data. Nepal was always in trade deficit which was increasing every year. Remittance inflow from migrant labors was a major source of foreign exchange which covered the payment of imported goods. The problems of foreign trade were landlocked country, transit and transport problems, illegal import-export, low value addition exportable commodities, incompetent Nepalese products in terms of cost and quality, poor physical infrastructure, industrial dependency on imported raw and intermediate materials, procedural problems created by foreign countries in the import-export of products, administrative hurdles etc.

scholarly journals Chile Fiscal Policy Management

2013 ◽  
Vol 16 (2) ◽  
pp. 45-62
Author(s):  
Ryszard Piasecki ◽  
Erico Wulf Betancourt
Keyword(s):  
Fiscal Policy ◽  
Public Debt ◽  
Budget Deficit ◽  
Budget Deficits ◽  
Policy Management ◽  
Total Revenue ◽  
The Public ◽  
The Government ◽  
Budget Surplus

A budget surplus arises in a country when the total revenue earnings surpass expenditures in a particular financial year. Having a budget surplus is very important in the sense that it brings about a decrease in the net public debt, while the public debt is increased in the event of a budget deficit. Both budget deficits and budget surpluses also exert indirect influences on taxpayers. Normally, it is not essential on the part of the government to maintain a budget surplus, though it needs to be very careful when running a budget deficit to have the proper buffer.  

Tajik bond issue is symptom of chronic debt addiction

2017 ◽  
Keyword(s):  
Financial Institutions ◽  
Budget Deficit ◽  
Foreign Currency ◽  
External Debt ◽  
Limited Capacity ◽  
Budget Deficits ◽  
International Financial Institutions ◽  
Bond Issue ◽  
Content Type ◽  
The Government

Subject Tajikistan's search for loans. Significance The government has successfully issued a bond to finance construction of the costly, high-prestige Roghun hydroelectric scheme. With limited capacity to increase revenue, the government finances budget deficits and new projects with loans and grants from international financial institutions (IFIs) and other foreign sources, notably China. Impacts External debt will mount up through persistent borrowing to cover the budget deficit. Debt servicing is risky given Tajikistan's vulnerability to fluctuating cotton and aluminium prices. Electricity exports are seen as a new foreign currency source but the major new plant is unfinished. Officials may view bond issuance as a 'cost-free' way of funding projects when IFIs shy away.

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