scholarly journals Estimating Optimum Growth-Maximizing Public Debt Threshold for Nepal

2020 ◽  
Vol 32 (2) ◽  
pp. 1-28
Author(s):  
Gopal Prasad Bhatta ◽  
Anu Mishra
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Trade Openness ◽  
Threshold Level ◽  
Debt Management ◽  
Annual Data ◽  
Bivariate Model ◽  
Long Run ◽  
Short Run ◽  
The Government

One of the common agenda of underdeveloped economies is to achieve a high and sustainable level of economic growth in the long run. Domestic and external borrowings are playing a crucial role in fulfilling the resource gap in the context of Nepal for a long period. A growing number of recent studies support the idea of a debt threshold level (turning point) above which debt starts reducing economic growth. This paper empirically investigates the relationship between economic growth and several other factors (investment, trade openness, population growth, domestic savings, and government debt) in the context of Nepal. The debt-growth relationship has been estimated by regression analysis and further explored the non-linear relationship between public debt and economic growth using time series annual data for the period of 1976-2019. The ARDL bound technique has been applied to estimate the short-run and the long run impact of debt on economic growth. Moreover, a quadratic bivariate model based on ARDL coefficients has been estimated to identify the growth maximizing level of debt. The estimated parameters confirm the optimum public debt to GDP ratio in the context of Nepal is 33 per cent. The policy implication of this finding for the Government of Nepal (GoN) is to ensure public debt management in line with the growth maximizing debt threshold. Further, a high level of trade deficits and government effectiveness in public sector management squeezes the fiscal space in utilizing adequate public debt in Nepal.

scholarly journals Public Debt and Economic Growth in Niger: An Autoregressive Distributed Lag Approach

2020 ◽  
Vol 1 (2) ◽  
pp. 56-65
Author(s):  
Issoufou Oumarou
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Unit Root Test ◽  
Annual Data ◽  
African Countries ◽  
Policy Makers ◽  
Significance Level ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run

Purpose: The aim of the paper is to examine the existence or not of a long run or a short run relationship between public debt and economic in Niger and investigate the significance of this relationship. Approach/Methodology/Design: The study first applied time series econometrics tests such as Augmented Dickey-Fuller (ADF) unit root test, Bound cointegration test and Auto Regressive Distributed Lag (ARDL) on annual data obtained from the International monetary fund (IMF) and the West African States Central Bank (BCEAO). The observations cover the period from 1970 to 2019. The study then performed some residual tests including serial correlation, normality and heteroskedasticity for the accuracy of the prediction of the model. Findings: The empirical results showed no long run relationship between public debt and economic growth in Niger. The short run analysis revealed that public debt and budget balance have short run causal effects on economic growth in Niger. The coefficients are significant at 10% significance level. Practical Implications: This article gives valuable information to Niger policy makers regarding the effects of public debt on Niger economic growth. The article highlights the effects that public debt has on economic growth in Niger in the short and long run. Therefore helping policy makers decide whether to increase or reduce the borrowing trend. Originality/value: The results of the paper give valuable information on the relationship that public debt may have with economic growth in Sub Saharan African countries with the similar macroeconomic indicators with Niger.

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.

scholarly journals Relative Impact of Domestic and Foreign Public Debt on Economic Growth in South Africa

2020 ◽  
pp. 193672442098041
Author(s):  
Talknice Saungweme ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Public Debt ◽  
Foreign Debt ◽  
Negative Relationship ◽  
Relative Impact ◽  
Long Run ◽  
Short Run ◽  
The Government ◽  
The Impact

This paper investigates the debt-growth nexus by testing both the impact of aggregate public debt on economic growth and the relative impact of domestic and foreign public debt on economic growth using South Africa as the case study—from 1970 to 2017. Based on the autoregressive distributed lag (ARDL) technique, the findings reveal that the impact of aggregated public debt on economic growth in South Africa is statistically significant and negative, both in the short run and in the long run. The results further reveal that domestic public debt and economic growth have a statistically significant and positive relationship in the short run only. Furthermore, foreign public debt has a statistically significant and negative relationship with economic growth but only in the long run. Therefore, the study recommends the government to manage effectively its debt and to finance long-term high-returning productive investments that should translate into economic growth. Finally, the study cautions the country against growing public debt, predominantly foreign debt, to finance its increasing recurrent expenditure needs.

scholarly journals A Panel ARDL Analsis of the Productivity of Key Economic Sectors Contributing to Local Economic Growth in an Emerging Country

2020 ◽  
Vol 65 (1) ◽  
pp. 39-53
Author(s):  
Rufaro Garidzirai ◽  
Paul-Francois Muzindutsi
Keyword(s):  
Economic Growth ◽  
South African ◽  
Local Level ◽  
Annual Data ◽  
The South ◽  
Long Run ◽  
Key Sectors ◽  
Short Run ◽  
Local Economic Growth ◽  
The Government

AbstractIt has become precise and indisputable that the South African economic growth has been stagnant. Despite this stagnant growth, the productivity of key sectors is supposed to alleviate some of the challenges of the South African economy. The aim of this study is to identify the key sectors that may assist in boosting economic growth at a local level. This study employed three estimators (PMG, MG and DFE) of a panel autoregressive distributed lag model (ARDL) to analyse the short- and long-run effects of various sectors’ productivity on economic growth in a South African district. By employing annual data from 1996 to 2015, 6 sectors (construction, finance, trade, community service, manufacturing, transport, mining and tourism) from four municipalities in South Africa were analysed. Results show that the productivity of the construction, transport, trade, manufacturing and finance sectors influence economic growth positively in the long-run. However, the productivity of the mining and tourism sectors negatively affect economic growth in the long-run. Short-run results reveal that, in the short-run, the productivity of all sectors, except trade and transport, contribute positively to local economic growth. This study recommends that the government improves the production methods and invests in infrastructure and skills development to advance the productivity of the mining and tourism sectors.

scholarly journals The Dynamic Relationship between Globalization and Economic Growth: Its Implication on Business Policy

2019 ◽  
Vol 1 (02) ◽  
pp. 100-111 ◽  
Author(s):  
Rima Midiyanti ◽  
Ming Hung Yao
Keyword(s):  
Economic Growth ◽  
Annual Data ◽  
Integration Policy ◽  
Business Policy ◽  
Dynamic Relationship ◽  
Long Run ◽  
Short Run ◽  
Political Globalization ◽  
The Government ◽  
Cointegration Relationship

The purpose of this study is to investigate the relationships between globalization and economic growth in Indonesia. Three globalization indices, economic globalization index, social globalization index and political globalization index, are used to measure the globalization. Johansen’s (1988) cointegration approach is used to estimate the model by using annual data from 1980 to 2014. The results indicate that there is a long-run cointegration relationship between globalization and economic growth in Indonesia. Globalization stimulates Indonesian economic growth in the long run. Meanwhile, political globalization implies short-run effect on the economic growth in Indonesia. From the policy perspective, this results support the argument that the government should take the international integration policy to sustain long-run economic growth.

scholarly journals Public debt and economic growth: Further evidence for the euro area

2018 ◽  
Vol 68 (2) ◽  
pp. 209-229 ◽  
Author(s):  
Marta Gómez-Puig ◽  
Simón Sosvilla-Rivero
Keyword(s):  
Economic Growth ◽  
Euro Area ◽  
Public Debt ◽  
Negative Impact ◽  
Annual Data ◽  
Bounds Testing ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Short Run

This paper empirically investigates the short and the long run impact of public debt on economic growth. We use annual data from both the central and the peripheral countries of the euro area (EA) for the 1961–2013 period and estimate a production function augmented with a debt stock term by applying the Autoregressive Distributed Lag (ARDL) bounds testing approach. Our results suggest different patterns across the EA countries and tend to support the view that public debt always has a negative impact on the long-run performance of EA member states, whilst its short-run effect may be positive depending on the country.

Do Financial Development, Trade Openness and Political Stability Complement for Egypt’s Economic Growth?

2020 ◽  
pp. 2150001
Author(s):  
Zakaria Yakubu ◽  
Nanthakumar Loganathan ◽  
Narayan Sethi ◽  
Asan Ali Golam Hassan
Keyword(s):  
Economic Growth ◽  
Causal Relationship ◽  
Financial Development ◽  
Trade Openness ◽  
Government Expenditure ◽  
Political Stability ◽  
The Political ◽  
Annual Data ◽  
Long Run ◽  
Short Run

This study examines the complement of financial development, trade openness, political stability and integrating government expenditure on Egyptian economy using time series annual data covering the period 1977 until 2018. This study used the ARDL-ECM estimates to determine the long and short-run cointegration between the series. The estimated results indicated that the financial development enhances growth in the long-run, while the political stability undermined the economic growth in the long-run. Interestingly, we found financial development, trade openness and government expenditure Granger cause economic growth in the short-run, while political stability Granger causes economic growth in both short and long-run; and a similar result with the causal relationship appeared in the strong causal relationship condition. Overall, this study showed that both financial development and trade openness gave evidence of causing growth, but the political stability does not. Thus, the reform policies should continue, while adopting measures to ensure that all the determinants are complementing to growth in Egypt as they are all pivotal and it is imperative for policy analysts to put into perspective when formulating policies as the study captures a novel political stability variable towards growth.

scholarly journals FINANCIAL CRISES AND ECONOMIC GROWTH OF NIGERIA

2021 ◽  
Vol 8 (1) ◽  
pp. 13-33
Author(s):  
Ogbebor Peter ◽  
◽  
Awonuga Adesola ◽  
Ezenwa Anthony ◽  
Oamen Gregory ◽  
...  
Keyword(s):  
Economic Growth ◽  
Financial Crises ◽  
Time Series Data ◽  
Positive Impact ◽  
Trade Openness ◽  
Series Data ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Government

The effects of financial crises on economic growth of countries are destabilizing and research interests in this area in the case of Nigeria has not be sufficiently exhibited, hence, this study. The study examined the effect of financial crises on economic growth in Nigeria using time series data that covered a period from 1986 to 2019. For data analysis, the major empirical tools utilized are Autoregressive Distributed Lag (ARDL) Co-integration and ECM techniques, following the result of the unit root tests that revealed mixture of I(0) and I(1). The ARDL Co-integration result revealed that long run relationship exists among the selected variables of interest in this study. Furthermore, ECM technique revealed that Financial Crises have negative and significant effect on Economic growth in Nigeria both in the long run and short run. Also, the effect of current value of Inflation was found to be negative and significant in the long run and that of Trade openness was positive and statistically significant in the short run. Also, the study found that there are long run and short run positive and significant impacts of Liberalization on Economic growth. Finally, the findings revealed that the current year values of Money Supply have negative and significant impact on current Economic growth; however, its past value has positive impact. The study concluded that a long-run relationship existed between financial crises and economic growth; specifically, such crises have negative and significant effects on economic growth of Nigeria. The government in general should tinker with the current policy prescription regarding the establishment of financial institutions especially those that cannot qualify for the status of domestically systematically important to avert recurring crises in the financial sector that have impacted the macro-economy negatively.

Does Public Debt Service Expenditure Crowd-Out Economic Growth? Empirical Evidence from an African Developing Country

2019 ◽  
Vol 64 (3) ◽  
pp. 23-38
Author(s):  
Talknice Saungweme ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Time Series Data ◽  
Policy Formulation ◽  
Debt Service ◽  
Series Data ◽  
Long Run ◽  
Short Run ◽  
The Impact

Abstract This paper contributes to the ongoing debate on the impact of public debt service on economic growth; and it provides an evidence-based approach to public policy formulation in Zimbabwe. The empirical analysis was performed by applying the autoregressive distributed lag (ARDL) technique to annual time-series data from 1970 to 2017. The study findings reveal that the impact of public debt service on economic growth in Zimbabwe is negative in the short run but positive in the long run. The results are suggestive of the existence of a crowding-out effect of public debt service in Zimbabwe in the short run and a crowding-in effect in the long run. In view of these findings, the government should consider fiscal and financial policies that promote a constant supply of long-term finance, long-term fixed investments, and extension of a government securities maturity structure so as to ensure sustainable short- and long-term public debt service expenditures. The study further recommends the strengthening of non-distortionary revenue mobilisation reforms to reduce market distortions and boost domestic investment.

THE IMPACT OF RESEARCH AND DEVELOPMENT INVESTMENT ON AGRICULTURAL SECTOR PERFOMANCE IN KENYA

2017 ◽  
Vol 2 (1) ◽  
pp. 34-57
Author(s):  
John Githii Kimani ◽  
Dr. George Ruigu Ruigu
Keyword(s):  
Research And Development ◽  
Agricultural Sector ◽  
Research Policy ◽  
Trade Openness ◽  
Policy And Practice ◽  
Long Run ◽  
Short Run ◽  
The Government ◽  
Parsimonious Model ◽  
The Impact

Purpose: The purpose of the study was to assess the impact of research and development investment/expenditure on the agricultural sector performance in Kenya.Methodology: The study took the peoples impact assessment direction. The data for this study was collected from various government agencies such as KARI, ASTI, Kenya Agricultural Sector Data compendium website, FAOSTAT, World Bank among others. Co-integration and error correction modeling methods were used in analyzing the data for this study.Results: Co-integration results for both the parsimonious and non-parsimonious model indicated that that there is a long-run relationship among the variables in the agriculture performance in Kenya. Further, findings in this study indicated that the variables under study were insignificant determinants of the long run Total Factor Productivity of the agricultural sector.  Meanwhile, Trade openness was the only significant determinant of the short run agricultural Total Factor Productivity.Unique Contribution to Policy and Practice: This study recommends the institutionalization of policies aimed at ensuring interaction between the various stakeholders in the agricultural sectors. This interaction will ensure that resources are better allocated to reduce duplication of research and dissemination activities. In addition, greater collaboration among the stakeholders will promote and strengthen the connection between research, policy and the application of research findings. The study further advocates that the government should follow a trade liberazation oriented approach to the agricultural sector as opposed to a trade tightening approach.

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