The Dynamics of Foreign Public Debt and Foreign Exchange Reserve of Ethiopia: Autoregressive Distributed Lag Model Approach

External public debt and foreign exchange reserve (FER) are performing a crucial role in the growth and development of countries. To examine the short-run and long-run dynamics among external public debt (EPD) and FER in Ethiopia, the study used 39 years data (1981 to 2019) from National bank of Ethiopia (NBE) and World Bank data sets. The Autoregressive Distributed Lag (ARDL) model with error correction model (ECM) was employed after checking the possible assumptions of economic series. The results of ADF test statistics confirms our economic series are stationary with a mixture of level form and first difference form. Bounds co-integration test suggests the existence of co-integration among the variables. According to the descriptive method of data analysis, on average, in Ethiopia the trend for service sector indicated that an ever improvement of the sector throughout the periods and supplementing the notion of change from agriculture base to service sector. On the other hand, according to ARDL model in the short -run on average trade tariff rate, share of manufacturing sector from the GDP, and lagged value of EPD itself predicts the EPD significantly at least at less than 10% level of significance . Moreover, the ECM revealed that in the long-run, financial development indicator, debt service payment, and average trade tariff rate were predicting the stock of FER for Ethiopian economy. Finally, the concerned body, the government of Ethiopia, should limit or reduce the amount of external debt (ED) inflows, and recheck the budget sources for financing different projects especially manufacturing industries rather than highly basing on external sources in the form of EPD, among others.

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The Dynamics between External Public Debt and Foreign Exchange Reserve of Ethiopia Economy: 1981 to 2019

Journal of University of Shanghai for Science and Technology ◽

10.51201/jusst/21/11970 ◽

2021 ◽

Vol 23 (11) ◽

pp. 791-824

Author(s):

Solomon Kebede Menza ◽

◽

Zerihun Getachew ◽

Berhanu Kuma ◽

Tora Abebe ◽

...

Keyword(s):

Foreign Exchange ◽

Public Debt ◽

Service Sector ◽

Tariff Rate ◽

Foreign Exchange Reserve ◽

Distributed Lag ◽

Distributed Lag Model ◽

Long Run ◽

Short Run ◽

The Government

This paper empirically examined the short-run and long-run dynamics among external public debt and foreign exchange reserve of Ethiopia. The two variables are playing a pivotal role in the growth and development of nations economy. To achieve the objective the study took 39 years data from the year 1981 to 2019 from National bank of Ethiopia and World Bank data sets. The study used descriptive analysis and empirical methods of analysis. The Autoregressive Distributed Lag model with error correction models were employed after checking the possible assumptions of our economic series. The results of ADF test statistics confirms our economic series are stationary at level and first difference forms. Bounds co-integration test suggests one co-integrating relationship between the variables taking foreign exchange reserve as the outcome variable. According to the descriptive method of analysis, on average, in Ethiopia the trend for service sector indicated that an ever improvement of the sector throughout the periods and supplementing the notion of change from agriculture base to service sector. In addition, the trade tariff rate of Ethiopian economy is indicating a downward movement and this in turn justifies the relative openness of the economy to the globe. In the same manner the financial development indicator of the nation is rising, which assures relative improvement in the financial sector. On the other hand, according to the Autoregressive Distributed Lag model in the short -run average trade tariff rate, share of manufacturing sector from the GDP, and lagged value of EPD itself predicts the external public debt significant at least at less than 10 percent level of significance. Moreover, the error correction model revealed that in the long-run, financial development indicator, debt service payment, and average trade tariff rate were predicting the stock of foreign exchange reserve for Ethiopian economy. The result also indicates that in the short-run, only the share of agriculture and service sectors are significantly predicting the variations of the stock of foreign exchange reserve, ceteris paribus. Finally, the concerned body specially the government of Ethiopia should limit or reduce the amount of external debt inflows that has an adverse effect on debt service payment, and recheck the budget sources for financing different projects especially manufacturing industries rather than highly basing on external sources in the form of external public debt . More importantly, the government should enhance the value of export potential, among others.

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A Test of the validity of Crowding-out (or- in) hypothesis: A new examination of link between public borrowing and private investment in Emerging Europe

Croatian Operational Research Review ◽

10.17535/crorr.2021.0008 ◽

2021 ◽

Vol 12 (1) ◽

pp. 91-103

Author(s):

Mehmed Ganic ◽

Lejla Hodzic ◽

Ognjen Ridic

Keyword(s):

Public Debt ◽

Private Investment ◽

Transition Countries ◽

Crowding Out ◽

Debt Burden ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Pooled Mean Group ◽

Long Run ◽

Short Run

This study seeks to test the existence of the crowding-out (or- in) hypothesis in a sample of 17 Emerging Europe countries divided in two panels. The study employs a panel autoregressive distributed lag (ARDL) model based on three estimators, Mean Group Estimator (MG), Pooled Mean Group (PMG) and Dynamic Fixed Effect (DFE), in order to evaluate the of stability of short run and long run coefficients using consistently compiled public borrowing and private investment data between 2000 and 2019. The empirical findings of the paper generally confirm the existence of a crowding out effect in both long run and short run in European post-transition countries, and in the long run for European transition countries. More specifically, elasticity of private investment with respect to public debt is greater in the European transition countries than in the European post-transition countries. However, the findings on the crowding out (in) effect of government spending and economic growth on private investment are mixed and conflicting in both the long run and the short run. Accordingly, the study recommends that selected countries should reassess their austerity agendas employed for lowering debt levels, and follow new strategies for managing public debt burden.

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Effects of Agricultural, Manufacturing, and Mineral Exports on Angola’s Economic Growth

Energies ◽

10.3390/en13061494 ◽

2020 ◽

Vol 13 (6) ◽

pp. 1494 ◽

Cited By ~ 1

Author(s):

Titus Isaiah Zayone ◽

Shida Rastegari Henneberry ◽

Riza Radmehr

Keyword(s):

Economic Growth ◽

Positive Impact ◽

Dutch Disease ◽

Ardl Model ◽

Agricultural Exports ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Short Run ◽

Using Data

This study investigates the effects of Angola’s agricultural, manufacturing, and mineral exports on the country’s economic growth using data from 1980 to 2017. An Autoregressive Distributed Lag (ARDL) model is employed to estimate the effect of sectoral exports on economic growth. The estimation results show that while exports from all three sectors (manufacturing, mineral, and non-mineral) have driven Angola’s economic growth in the long-run; only non-manufacturing (agricultural and mineral) exports have led its growth in the short-run. Moreover, growth in non-export GDP was driven by mineral exports in the long-run and agricultural exports in the short-run. Considering the statistically significant and positive impact of mineral exports on the Angolan GDP as well as on its non-export GDP, this study points to a lack of evidence supporting the Dutch disease phenomenon in Angola.

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Does Trade Related Sectoral Infrastructure Make Chinese Exports More Sophisticated and Diversified?

Sustainability ◽

10.3390/su13105408 ◽

2021 ◽

Vol 13 (10) ◽

pp. 5408

Author(s):

Faheem Ur Rehman ◽

Ejaz Ahmad ◽

Muhammad Asif Khan ◽

József Popp ◽

Judit Oláh

Keyword(s):

Dynamic Method ◽

Asymmetric Effect ◽

Dynamic Approach ◽

Ardl Model ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Short Run ◽

Chinese Export ◽

Model Approach

Whether better infrastructure influences Chinese export sophistication (ES) and diversification (ED) is an important question, which surprisingly remains unaddressed. The current study contributes to the ES and ED literature by capturing the symmetric and asymmetric effect of infrastructure on ES and ED. We employ a robust dynamically simulated autoregressive distributed lag (DYS-ARDL) dynamic method, which is an extended version of NARDL and ARDL. The major aim of this new DYS-ARDL dynamic approach was to abolish the issue in orthodox ARDL model approach while examining the long-run and short-run. The new dynamic DYS-ARDL model is accomplished in estimating, stimulating, and robotically plotting predictions of counterfactual alterations in one explanatory variable and its impact on the dependent variable while holding the remaining regressors constant. Furthermore, this new method of DYS-ARDL model can estimate, stimulate, and plot to forecast graphs of positive and negative variations in the variables robotically as well as their short and long-run associations. Interestingly, the results of this study witness the presence of long-run relationship between infrastructure and ES and ED in China. The present study shows that better infrastructure will be more beneficial for Chinese ED and ES.

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Fiscal Policy and Sustainability of Public Debt: The Nigerian Experience

10.21203/rs.3.rs-617833/v1 ◽

2021 ◽

Author(s):

ANTHONY IMOISI

Keyword(s):

Fiscal Policy ◽

Public Debt ◽

Inflation Rate ◽

Allocative Efficiency ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Short Run ◽

Sustainability Of Public Debt ◽

The Relationship

Abstract This paper examines the relationship between fiscal policy and public debt sustainability in Nigeria within a multivariate framework from 1970–2019. The autoregressive distributed lag (ARDL) bounds test is employed to determine the long run relationship among the variables. The results of the ARDL test reveal that there is a long run relationship between the variables used in this study. Specifically, the result shows that budget deficit has a positive and significant impact on public debt both in the short run and long, while interest rate, real gross domestic product and inflation rate were statistically insignificant irrespective of the period and thus had no impact on public debt. Thus, it was recommended that the budgeting procedure at the federal and state levels in Nigeria need to reassessed to make sure that allocative efficiency is achieved in the budgeting system.

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Causality Between Public Debt, Public Debt Service and Economic Growth in an Emerging Economy

Studia Universitatis Babe-Bolyai Oeconomica ◽

10.2478/subboec-2020-0001 ◽

2020 ◽

Vol 65 (1) ◽

pp. 1-19

Author(s):

Talknice Saungweme ◽

Nicholas M. Odhiambo

Keyword(s):

Economic Growth ◽

South Africa ◽

Public Debt ◽

Debt Service ◽

Bounds Testing ◽

Causality Test ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Short Run

AbstractThis paper explores the causality between public debt, public debt service and economic growth in South Africa covering the period 1970 – 2017. The study employs the autoregressive distributed lag (ARDL) bounds testing approach to cointegration and the multivariate Granger-causality test. The empirical results indicate that there is unidirectional causality from economic growth to public debt, but only in the short run. However, the study fails to establish any causality between public debt service and economic growth, both in the short run and long run. In line with the empirical evidence, the study concludes that it is economic growth that drives public debt in South Africa, and that the causal relationship between public debt and economic growth is sensitive to the timeframe considered. The paper recommends policymakers in South Africa to consider growth-enhancing policies in the short run, since poor economic performances may lead to high public debt levels.

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

Acta Oeconomica ◽

10.1556/032.2018.68.2.2 ◽

2018 ◽

Vol 68 (2) ◽

pp. 209-229 ◽

Cited By ~ 9

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.

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Public Debt Service in South Africa and Its Impact on Economic Growth: An Empirical Test

The Review of Black Political Economy ◽

10.1177/0034644620960228 ◽

2020 ◽

pp. 003464462096022

Author(s):

Talknice Saungweme ◽

Nicholas M. Odhiambo

Keyword(s):

Economic Growth ◽

South Africa ◽

Public Debt ◽

Empirical Test ◽

Debt Service ◽

Policy Implications ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Short Run

By applying the autoregressive distributed lag approach, this article investigates the dynamic impact of public debt service on economic growth in South Africa, covering the period from 1970 to 2017. In the recent past, alarming bells have already started sounding about the country’s high debt/gross domestic product (GDP) ratio amid chronic low GDP growth. The article seeks to contribute to the debate that limiting the proportion of public debt service payments to gross national product can achieve economic growth by freeing domestic resources. The empirical findings of the study show that there is no statistically significant relationship between public debt service and economic growth in South Africa, irrespective of whether the estimations are done in the long run or in the short run. Policy implications are discussed.

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Impact of Environmental Tax on Comparative Advantage of Food and Food Products: A Study of G20 Countries in Light of Environmentally Sensitive Goods

The Indian Economic Journal ◽

10.1177/00194662211035273 ◽

2021 ◽

pp. 001946622110352

Author(s):

Alisha Mahajan ◽

Kakali Majumdar

Keyword(s):

Comparative Advantage ◽

Food Products ◽

Environmental Taxes ◽

Environmental Tax ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Short Run ◽

Environmentally Sensitive ◽

The Relationship

Many countries are under constant fear that environmental policies might negatively influence the international competitiveness of polluting industries. In this study, we aim to evaluate the relationship and impact of the environmental tax on comparative advantage of trade in food and food products industry, considered to be one of the highly environmentally sensitive industries. This study also investigates, whether this relationship differs among countries covered in G20, with the help of correlation analysis. We select panel autoregressive distributed lag approach for this study as it can analyse long-run as well as short-run association even when the variables are stationary at different orders of integration. Using panel data from G20 countries over the period of 21 years that is from 1994 to 2015, it is concluded that when we allow environmental taxes to interact with the revealed comparative advantage (RCA) of G20 nations, the overall impact of the environmental tax on the RCA is negative in the long period. It is therefore suggested that countries should follow Porter hypothesis to stimulate innovations resulting from strict environmental regulations that affect the environment in least possible manner. JEL Codes: C01, C23, C33, F18, O57, Q5

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The Determinants of Food Prices in Pakistan

THE LAHORE JOURNAL OF ECONOMICS ◽

10.35536/lje.2012.v17.i1.a6 ◽

2012 ◽

Vol 17 (1) ◽

pp. 101-128 ◽

Cited By ~ 2

Author(s):

Henna Ahsan ◽

Zainab Iftikhar ◽

M. Ali Kemal

Keyword(s):

Active Role ◽

Food Prices ◽

Significant Variable ◽

Demand And Supply ◽

Distributed Lag ◽

Distributed Lag Model ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Short Run ◽

Lag Model

Controlling prices is one of the biggest tasks that macroeconomic policymakers face. The objective of this study is to analyze the demand- and supply-side factors that affect food prices in Pakistan. We analyze their long-run relationship using an autoregressive distributed lag model for the period 1970–2010. Our results indicate that that the most significant variable affecting food prices in both the long and short run is money supply. We also find that subsidies can help reduce food prices in the long run but that their impact is very small. Increases in world food prices pressurize the domestic market in the absence of imports, which cause domestic food prices to rise. If, however, we import food crops at higher international prices, this can generate imported inflation. The error correction is statistically significant and shows that market forces play an active role in restoring the long-run equilibrium.

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