scholarly journals Cointegration and Causality Study Among Inward FDI, Economic Growth and Exports

2020 ◽  
Vol 11 (1) ◽  
pp. 63-77
Author(s):  
Jekka Chandrasekaran Sharmiladevi
Keyword(s):  
Economic Growth ◽  
Empirical Relationship ◽  
Wald Test ◽  
International Markets ◽  
Significant Feature ◽  
Correction Coefficient ◽  
Time Period ◽  
Short Run ◽  
Causality Relationship

One significant feature of liberalisation for India has been a greater openness to foreign direct investment (FDI) as a means of acquiring technologies, skills and access to international markets, and of entering dynamic trade and production. The study analyses the empirical relationship between inward FDI, economic growth and exports of India from 1970-71 to 2013-2014. The objective of this article is to investigate the relationship between FDI, economic growth and exports empirically. The error correction coefficient value indicates a 15.02% movement back towards equilibrium following a shock to the model, one time period later. OLS indicate significant long-term causality relationship among the variables with high R2 value to the tune of 0.758660. The Wald Test establishes short-run causality from economic growth to inward FDI, and from exports to inward FDI. A one-way causality relationship is running from exports to inward FDI. Economic growth causes inward FDI, but, inward FDI is not causing economic growth. Exports cause inward FDI, and inward FDI does not cause exports.

scholarly journals Direction of Causality between Financial Development and Economic Growth in Turkey

2021 ◽  
pp. 22-37
Author(s):  
Cengiz Yılmaz ◽  
Banu Demirhan
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Gross Domestic Product ◽  
Financial Development ◽  
The Other ◽  
Development Indicators ◽  
Short Run ◽  
Causality Relationship ◽  
Using Data

This paper has investigated the causality relationship between financial development and economic growth in Turkey, using data from 2005:04 to 2020:03. We construct a time-series model to explore causality relationships between the variables. In the study, two indicators were used as financial development indicators: banking loans to the private sector and money supply to GDP (Gross Domestic Product). The empirical results have represented a bi-directional relationship between financial development and economic growth in the short run. On the other hand, we have not found a causality relationship in the long term.

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.

scholarly journals The Impact of Exchange Rate on Bangladesh’s Export: A Cointegration Approach

2020 ◽  
pp. 22-30
Author(s):  
Takrima Sayeda
Keyword(s):  
Exchange Rate ◽  
Foreign Exchange Market ◽  
Export Performance ◽  
Long Run ◽  
Time Period ◽  
Floating Exchange Rate ◽  
Short Run ◽  
Year 2000 ◽  
The Impact

The purpose of the paper is to see if there is any relationship exist between free floating exchange rate and export performance of Bangladesh. It inspects the monthly data of exchange rate and export value for the time period between year 2000 and 2017. It utilized the Johansen [1] cointegration approach to identify the extent of long run and short run relationship between them. The study could not establish neither any long term trend nor any short term dynamics between the variables. Respective variables are significantly related to their own immediate past values. Distant past values do not have any implications. This study suggests that short run macroeconomic policy would be beneficial to influence the foreign exchange market and eventually the performance of export of Bangladesh.

scholarly journals Finance and Growth: Evidence from South Asia

2018 ◽  
Vol 7 (1) ◽  
pp. 37-60 ◽  
Author(s):  
Sudip Patra ◽  
Sayantan Ghosh Dastidar
Keyword(s):  
South Asia ◽  
Financial Development ◽  
Empirical Relationship ◽  
Positive Association ◽  
Panel Model ◽  
Time Period ◽  
Domestic Savings ◽  
Domestic Credit ◽  
Short Run ◽  
Model Approach

The article examines the empirical relationship between financial development and economic growth for five South Asian countries over the time period 1990–2015, using both panel model approach and time series analysis. We employ multiple proxies for financial development, namely, foreign direct investment, total debt service, gross domestic savings, domestic credit to private sector by banks, and domestic credit provided by financial sector to test the relationship. The panel model approach results indicate that there is an overall positive association between finance and growth for South Asia through the FDI and savings channels. The country-specific analyses suggest that the growth effects of financial channels are most pronounced in Sri Lanka, whereas, on the other hand, financial development plays no role in the Indian growth process in the short run. Bangladesh, Nepal, and Pakistan lie somewhere in between this spectrum with every country exhibiting unique growth paths which highlights the heterogeneity of the region.

scholarly journals Evidence on the Nexus Between Electricity Consumption and Economic Growth through Empirical Investigation of Uganda

2015 ◽  
Vol 8 (1) ◽  
pp. 149-165
Author(s):  
Lira Sekantsiand ◽  
Mamofokeng Motlokoa
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Capital Stock ◽  
Capital Accumulation ◽  
Electricity Consumption ◽  
The Body ◽  
Electricity Sector ◽  
Short Term ◽  
Short Run

AbstractThis paper empirically examines the electricity consumption - economic growth nexus in Uganda for the period 1982 to 2013, with a view to contributing to the body of literature on this topic and informing energy policy design in Uganda. Using capital stock as an intermittent variable in the causality framework, the paper employs Johansen-Juselius (1988, 1995) multivariate cointegration and VECM based Granger causality tests and finds a bidirectional causality between electricity consumption and economic growth in the long-term and distinct causal flow from economic growth to electricity consumption in the short-run, and short-term and long-term Granger causality from capital stock to economic growth, with short-run feedback in the opposite direction. Therefore, it implies that firstly, the Government of Uganda (GoU) can implement conservation policies only through reducing energy intensity and promoting efficient energy use to avoid decline in output and secondly, that the GoU should intensify its efforts towards capital accumulation in order to realize sustainable economic growth. Lastly, the empirical evidence that electricity consumption influences some short-term capital accumulation supports the GoU’s efforts to allow private sector investment in the electricity sector in an effort to increase electricity supply.

scholarly journals Taxation, government spending and economic growth: The case of Bulgaria

2021 ◽  
Vol 7 (3) ◽  
pp. 255-266
Author(s):  
G. Ganchev ◽  
◽  
I. Todorov ◽  
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Tax Revenue ◽  
Gdp Growth ◽  
Real Gdp ◽  
Long Run ◽  
Gdp Growth Rate ◽  
Short Run ◽  
The Impact

The objective of this article is to estimate the impact of three fiscal instruments (direct taxes, indirect taxes, and government expenditure) on Bulgaria’s economic growth. The study employs an autoregressive distributed lag model (ARDL) and Eurostat quarterly seasonally adjusted data for the period 1999–2020. Four control variables (the shares of gross capital formation, household consumption, and exports in GDP as well as the economic growth in the euro area) are included in the model to account for the influence of non-fiscal factors on Bulgaria’s real GDP growth rate. The empirical results indicate a long-run equilibrium relationship between Bulgaria’s economic growth and the independent variables in the ARDL. In the short term, Bulgaria’s real GDP growth rate is affected by its own past values and the previous values of the shares of direct tax revenue, exports, government consumption, and indirect tax revenue in GDP. In the long term, Bulgaria’s economic growth is influenced by its own previous values and the past values of the share of household consumption in GDP and the euro area’s real GDP growth rate. Fiscal instruments can be used to stabilize Bulgaria’s growth in the short run but they are neutral in the long run. The direct tax revenue, government consumption, and indirect tax revenue are highly effective and can be used as tools for invigorating and stabilizing Bulgaria’s economic growth in the short run. However, in the long term, the real GDP growth rate can be hastened only by encouraging domestic demand (final consumption expenditure of households) and promoting exports. This research cannot answer the question of whether flat income taxation stabilizes the economy or not, since it does not separate the impact of tax rate changes from the influence of tax base modifications.

scholarly journals Examining the Validity of Wagner’s Law versus Keynesian Hypothesis: Evidence from Turkey’s Economy

2019 ◽  
Vol 66 (1) ◽  
pp. 117-130 ◽  
Author(s):  
Özcan Karahan ◽  
Olcay Çolak
Keyword(s):  
Economic Growth ◽  
Public Expenditures ◽  
Economic Policies ◽  
Wagner’S Law ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Short Run ◽  
National Output ◽  
Causality Relationship ◽  
Wagner's Law

Abstract The direction of the causality relationship between public expenditures and economic growth is one of the most controversial issues of the literature, which also causes great disagreements in the design process of economic policies. There are two approaches to this subject, which are opposite each other and called “Wagner’s Law” and “Keynesian Hypothesis”. This paper aims to examine the validity of Wagner’s law and Keynesian proposition in Turkey using Autoregressive Distributed Lag (ARDL) model over the period of 1998-2016. The findings supported the “Keynesian Hypothesis”, which advocates a one-way causality relationship from public spending to national output. More specifically, the results of the study showed that the effect of public expenditures on economic growth was positive in the short term and negative in the long term. From an economic policy standpoint, it can be argued that policymakers can promote Turkish economic growth through expansionary fiscal policies in the short run.

scholarly journals Crop Production, Livestock Production and Economic Growth in Botswana (1990-2017): An Application of ARDL Model

2021 ◽  
Vol 9 (8) ◽  
pp. 1500-1508
Author(s):  
Mufaro Andrew Matandare ◽  
Patricia Masego Makepe ◽  
Lekgatlhamang Setlhare ◽  
Jonah Bajaki Tlhalefang
Keyword(s):  
Economic Growth ◽  
Crop Production ◽  
Agricultural Sector ◽  
Livestock Production ◽  
Long Term Effects ◽  
Bounds Testing ◽  
Long Run ◽  
Short Run ◽  
Testing Approach

There are few studies in Botswana which have examined the relationship between agriculture and economic growth. The uniqueness of this study is grounded in investigating disintegrated agriculture components into crop production and livestock production and investigating their nexus with economic growth. This study estimated the short and long term effects between crop production, livestock production and economic growth in Botswana for the period 1990 to 2017. The Auto-Regressive Distributed Lagged (ARDL) bounds testing approach was employed to investigate the stated relationship. Study findings from the ARDL bound testing approach confirm evidence of a long-run equilibrium relationship between crop production, livestock production and economic growth. Results indicated that livestock production has a positive and significant impact on economic growth both in the short run and long run. On the other hand crop production has a positive and significant impact on economic growth only in the long run. Efforts towards supporting agricultural sector growth should be emphasized to promote agricultural sector productivity in a bid to forge a move away from dependence on imports of food in Botswana. To enhance economic growth, in both the short run and long run, the government of Botswana and all relevant stakeholders should invest in and promote livestock production. In the long term, policies that foster crop production are essential for economic growth.

scholarly journals Causality Effects among Gross Capital Formation, Unemployment and Economic Growth in South Africa

Economies ◽  
2020 ◽  
Vol 8 (2) ◽  
pp. 26 ◽  
Author(s):  
Michael Takudzwa Pasara ◽  
Rufaro Garidzirai
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Inverse Relationship ◽  
Time Series Data ◽  
Capital Formation ◽  
Series Data ◽  
Vector Autoregressive ◽  
The Third ◽  
Short Run

Stagnant economic growth, decreasing investment and high unemployment remain consistent macroeconomic challenges for South Africa. Gross Capital formation (GCF) is designed to improve employment and economic growth (GDP). This study investigates the causality effects of the three variables using time series data from 1980 to 2018 in a Vector Autoregressive (VAR) framework. Results of the first model reveal a positive long-term relationship between gross capital formation GCF and economic growth GDP. Contrariwise, the first model indicates that unemployment (UNEMP) does not influence economic growth (GDP) in the short run. The second model results reveal a significant and positive relationship between UNEMP and GCF, while the third model shows an inverse relationship between GDP and UNEMP. Based on these findings, the study therefore recommends that fiscal authorities introduce expansionary fiscal policy that stimulates economic growth, investment and employment.

THE CAUSAL RELATIONSHIP BETWEEN INSURANCE AND ECONOMIC GROWTH IN NIGERIA (1986-2010)

2012 ◽  
Vol 02 (12) ◽  
pp. 49-57
Author(s):  
TAIWO AKINLO
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Causal Relationship ◽  
Causality Test ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Short Run

This study examined the causal relationship between insurance and economic growth in Nigeria over the period 1986-2010. The Vector Error Correction model (VECM) was adopted. The cointegration test shows that GDP, premium, inflation and interest rate are cointegrated when GDP is the edogeneous variable. The granger causality test reveals that there is no causality between economic growth and premium in short run while premum, inflation and interest rate Granger cause GDP in the long run which means there is unidirectional causality running from premium, inflation and interest rate to GDP. This means insurance contributes to economic growth in Nigeria as they provide the necessary long-term fund for investment and absolving risks.

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