Banking Competition and Economic Growth: 2006-2015 Case of Rwanda

It has been argued that a competitive and efficient financial sector is a prerequisite for economic growth and development. The objective of this study therefore was to determine the influence of bank competition on economic growth in Rwanda for the period 2006 - 2015.The study used Error Correction Model after conducting Unit Root Test(ADF) and Cointegration Test(Johansen) so that to check the degree of adjustment in the short run. The results revealed that Credit to GDP is highly significant and this implied that there is a need to set the policy influencing credit distribution in order to influence economic growth. In addition disequilibrium found in the short run is corrected quarterly at 70.32%.

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The Relationship between Tax Revenue and Economic Growth in Nepal: A Co-integration Approach

PYC Nepal Journal of Management ◽

10.3126/pycnjm.v11i1.35916 ◽

2018 ◽

Vol 11 (1) ◽

pp. 28-36

Author(s):

Gautam Maharjan

Keyword(s):

Economic Growth ◽

Error Correction ◽

Unit Root ◽

Unit Root Test ◽

Error Correction Model ◽

Series Data ◽

Tax Revenue ◽

Correction Model ◽

The Impact ◽

The Relationship

The main objective of this paper is to examine the relationship between tax revenue and economic growth in Nepal. The 43 years' annual time series data from 1974/75 to 2016/17 of GDP, tax revenue and nontax revenue have been used to test the causal relationship of the variables. A unit root test, Engle-Granger’s co-integration and Error Correction Model have been applied for the data analysis. The variables have been found stationary after first differencing I(1) when Augmented Dickey-Fuller unit root test is employed. From Engel-Granger test, it has been found that the variables are co-integrated. The short-term coefficients are not significant, however error correction term (ECT) is significant and contains a negative sign in the error correction model (ECM). It validates the ECM model. The ECT has shown that the annual speed of adjustment from disequilibrium to equilibrium is 34.3 percent. So far as the relationship is concerned, there is a long run relationship between tax revenue and economic growth in Nepal controlling the non-tax revenue. The impact of tax revenue on economic growth could be a good impetus for the policy maker and planner to increase the collection of revenue for the country.

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A Dynamic Relationship between Financial Development and Import Demand for Bangladesh: An Evidence from Combine Cointegration and Granger Causality Approach

Global Business Review ◽

10.1177/0972150917713863 ◽

2018 ◽

Vol 19 (3) ◽

pp. 543-555 ◽

Cited By ~ 2

Author(s):

Muhammad Ahad ◽

Adeel Ahmad Dar

Keyword(s):

Economic Growth ◽

Error Correction ◽

Financial Development ◽

Unit Root ◽

Unit Root Test ◽

Correction Method ◽

Import Demand ◽

Error Correction Method ◽

Long Run ◽

Short Run

This article has estimated the impact of financial development on import demand over the period of 1986: Q1–2014: Q4 in case of Bangladesh. The long-run relationship between financial development, import demand and economic growth are investigated by combine cointegration. Error Correction Method (ECM) is applied to examine short-run phenomena. The unit root properties of variables are tested by augmented Dickey–Fuller test (ADF) and Philips–Perron (P–P) unit root test. Perron (1997) single structural break unit root test is also applied. The results of Bayer and Hanck (2013) combine cointegration test that reveal the existence of long-run relationship between import demand, financial development and economic growth. Financial development and economic growth have a positive and significant impact on import demand in long run as well as in short run. The lagged value of error correction method (ECMt-1) is –0.08 that is negative and significant. This indicates that change from equilibrium level of import demand is corrected by 8 per cent per quarter in a year. The results of Vector Error Correction Model (VECM) Granger causality explain that bidirectional causality exists between import demand and financial development in long run as well as short run. Similarly, bidirectional causality exists between import demand and economic growth in short run. Policymakers should focus on financial sector development for import of technology through adoption of the import substitution policy.

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Pengaruh Investasi Portofolio Asing dan Variabel Makro Ekonomi Terhadap Perkembangan Pasar Saham Indonesia

Media Riset Bisnis & Manajemen ◽

10.25105/mrbm.v18i1.4989 ◽

2019 ◽

Vol 18 (1) ◽

pp. 30

Author(s):

Elmira Siska ◽

Desy Arigawati

Keyword(s):

Interest Rate ◽

Stock Market ◽

Error Correction ◽

Unit Root ◽

Unit Root Test ◽

Error Correction Model ◽

Correction Model ◽

Market Growth ◽

Long Run ◽

Short Run

Abstract Purpose – The purpose of this research is to examine the effect of Foreign Portfolio Investment and some of macroeconomic variables included gross domestic product, exchange rate, interest rate and inflation rate on stock market growth in Indonesia in the long run. Design/Methodology/Approach - This study used descriptive analysis method with a quantitative approach. The data used in this study were secondary data with a time series period 2009 – 2016. To analize the data, several econometric techniques were applied in this study i.e. the unit root test, co integration test and Error Correction Model (ECM).Findings - Results of this study indicate that all variables are significantly effect on stock market growth in Indonesia in the short run and long run, except interest rate. Interest rate only has significant effect in the short run. This result can be reference or consideration for the government in formulating policies to improve the development of Indonesian stock market. Abstrak Tujuan – Penelitian ini bertujuan untuk menguji pengaruh Investasi Portofolio Asing dan beberapa variabel makroekonomi terpilih yaitu produk domestik bruto, nilai tukar rupiah, suku bunga dan tingkat inflasi terhadap pertumbuhan pasar saham di Indonesia dalam jangka panjang.Desain/Metodologi/ Pendekatan – Penelitian ini menggunakan metode analisis deskriptif dengan pendekatan kuantitatif. Data yang digunakan dalam penelitian ini adalah data sekunder dengan deret waktu kuartalan periode period 2009.1 – 2016.4. Untuk mengolah data, beberapa teknik ekonometrik digunakan dalam penelitian ini, antara lain, unit root test (uji akar unit), uji kointegrasi dan Error Correction Model (ECM).Temuan – Hasil penelitian mengindikasikan bahwa semua variabel penelitian mempunyai pengaruh yang signifikan terhadap pertumbuhan pasar saham di Indonesia dalam jangka panjang, kecuali tingkat suku bunga. Tingkat suku bunga hanya mempunyai efek yang signifikan dalam kangka pendek. Hasil penelitian ini dapat menjadi acuan atau pertimbangan bagi pemerintah dalam merumuskan kebijakan dalam rangka mengembangkan pasar saham Indonesia.

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Innovation, ICT penetration, trade and economic growth in developing and developed countries: a VECM approach

Competitiveness Review An International Business Journal incorporating Journal of Global Competitiveness ◽

10.1108/cr-05-2021-0074 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Parul Singh ◽

Areej Aftab Siddiqui

Keyword(s):

Economic Growth ◽

Error Correction ◽

Developing Nations ◽

Vector Error Correction Model ◽

Correction Model ◽

Content Type ◽

Vector Error Correction ◽

Vector Error ◽

Short Run ◽

Developed Nations

Purpose The development in information communication and technology (ICT) has led to many changes such as reorganization of economics, globalization and trade. With more innovation processes being organized and adopted across technologies, trade, etc., these are getting more closely related and needs fresh research perspective. This study aims to empirically investigate the interrelationship between ICT penetration, innovation, trade and economic growth in 20 developed and developing nations from 1995 to 2018. Design/methodology/approach The present paper examines both long-run and short-run relationships between the four variables, namely, innovation, ICT penetration, trade and economic growth, by applying panel estimation techniques of regression and vector error correction model. ICT penetration and innovation indices are constructed using principle component analysis technique. Findings The findings of the study highlight that for developed nations, growth, trade and innovation are significantly interlinked with no significant role of ICT penetration While for developing nations, significant relationship is present between growth and trade, ICT penetration and innovation. With respect to trade, in case of developed nations, significant relationship is present with ICT penetration. While for developing nations there is no significant result for trade promotion. On further employing the vector error correction model, the presence of short run causality between growth, trade and innovation in case of developed nations is established but no such causality between variables for developing nations is seen. Originality/value The present paper adds to the existing strand of literature examining interlinkage between innovation and growth by introducing new variables of ICT penetration and innovation.

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ANALISIS HUBUNGAN PENDAPATAN WISATAWAN DAN HARGA PARIWISATA TERHADAP PERMINTAAN PARIWISATA DENGAN VECM

E-Jurnal Matematika ◽

10.24843/mtk.2016.v05.i02.p120 ◽

2016 ◽

Vol 5 (2) ◽

pp. 44

Author(s):

MERARY SIANIPAR ◽

NI LUH PUTU SUCIPTAWATI ◽

KOMANG DHARMAWAN

Keyword(s):

Unit Root ◽

Unit Root Test ◽

Cointegration Test ◽

Tourism Demand ◽

Long Run ◽

Negative Effect ◽

Short Run ◽

The Relationship ◽

Positive Effect

Tourism demand is focused on estimating variables which influence tourist visit. The tourism demand that we discuss on this research is the tourism demand to Bali of the major tourism-generating country was Australia. The aim of this research is to analyze the relationship between tourist income and tourism price to tourism demand using VECM. VECM requires that the variables in the model must be stationary and fulfilled a cointegration condition. In order to make it valid, the stationarity of variables in the model have to be checked using ADF unit root test. In additon, cointegration between these variables are examined using Johansen’s cointegration test. The results of ADF unit root test show that indicated the tourist income, the tourism price and the tourism demand for Australia data are stationary in first lag or I(1). Cointegration test shows that all variables are cointegrated, i.e. have a long-run relationship. In the long-run, the tourist income and tourism price give positive effect to the tourism demand. This means, the increase of tourist income and tourism price will contribute to the increase in tourism demand. In addition, in the short-run, the tourist income and the tourism price give negative effect to the tourism demand. This means, the increase of tourist income and tourism price will contribute to the decrease in tourism demand.

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Nexus between Agriculture and Unemployment in Nigeria

Journal of Economics Management and Trade ◽

10.9734/jemt/2019/v22i530103 ◽

2019 ◽

pp. 1-13

Author(s):

Oluwafemi S. Enilolobo ◽

Saidi A. Mustapha ◽

Onyeka P. Ikechukwu

Keyword(s):

Error Correction ◽

Granger Causality ◽

Unit Root ◽

Unit Root Test ◽

Model Estimation ◽

Correction Model ◽

Agriculture Sector ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Bounds Test

This study examined the impact of agriculture sector growth on unemployment level as well as the direction of causality between agricultural sector output and unemployment level in Nigeria. Secondary annual time series data between 1981 and 2016 were used for the study. Data on unemployment rate, agriculture sector output, public expenditure and industrial output were obtained from the Central Bank of Nigeria’s statistical Bulletin while data on FDI and population growth were obtained from the World Bank World Development Indicators. The data were analyzed using ADF (Augmented Dickey Fuller Test) unit root test, Autoregressive distributed lag Bounds test of cointegration, Autoregressive distributed lag error correction model estimation and Granger causality. The results of ADF unit root test revealed variables were at different orders of integration, the ARDL bounds test revealed cointegration between variables, and the Autoregressive distributed lag error correction model estimation revealed that change in agriculture output in the current period is negative and significant for current unemployment level in Nigeria, while the change in one period lagged agriculture output was positive and significant for current unemployment level in Nigeria. Also the error correction term indicated that about 74.10 percent of the disequilibrium in the system in the previous year would be corrected in the current year. Granger causality test results revealed bi-directional causality between agriculture output and unemployment level in Nigeria. The study recommends that the Nigeria government should using strategic policies targeted at boosting agriculture output such as increasing access to land for peasant rural farmers, investments in agricultural research, and so on, seek to boost agriculture output in order to reduce unemployment in Nigeria. Further, the Nigeria government should ensure that agriculture sector development policies are consistent with the objective of reducing unemployment in Nigeria.

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Foreign Aid and Economics Development Nexus: The Case of Sierra Leone

Archives of Business Research ◽

10.14738/abr.96.10395 ◽

2021 ◽

Vol 9 (6) ◽

pp. 219-233

Author(s):

Ezekiel Kalvin Duramany-Lakkoh

Keyword(s):

Economic Growth ◽

Foreign Aid ◽

Sierra Leone ◽

Growth And Development ◽

Secondary Data ◽

Empirical Estimation ◽

Economic Growth And Development ◽

Long Run ◽

Short Run ◽

The Impact

This study investigates the impact of foreign aid on economic growth in Sierra Leone using cointegration and error correction methodology by Johansen and Juselius (1990). Utilizing secondary data for the period 1970 to 2018, the empirical estimation revealed that foreign aid in Sierra Lone is positively and significantly related to economic growth both in the short run and long run, confirming the importance of the study. The policy implication of the study is that the Sierra Leone government should seek more foreign aid to accelerate economic growth and development.

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Re-estimation of Keynesian Model by Considering Critical Events and Multiple Cointegrating Vectors

The Pakistan Development Review ◽

10.30541/v54i2pp.123-145 ◽

2015 ◽

Vol 54 (2) ◽

pp. 123-145

Author(s):

Hafsa Hina ◽

Abdul Qayyum

Keyword(s):

Exchange Rate ◽

Random Walk ◽

Error Correction ◽

Unit Root ◽

Dynamic Error ◽

Correction Model ◽

Keynesian Model ◽

Long Run ◽

Out Of Sample ◽

Short Run

This study employs the Mundell (1963) and Fleming (1962) traditional flow model of exchange rate to examine the long run behaviour of rupee/US $ exchange rate for Pakistan economy over the period 1982:Q1 to 2010:Q2. This study investigates the effect of output levels, interest rates and prices and different shocks on exchange rate. Hylleberg, Engle, Granger, and Yoo (HEGY) (1990) unit root test confirms the presence of non-seasonal unit root and finds no evidence of biannual and annual frequency unit root in the level of series. Johansen and Juselious (1988, 1992) likelihood ratio test indicates three long-run cointegrating vectors. Cointegrating vectors are uniquely identified by imposing structural economic restrictions on purchasing power parity (PPP), uncovered interest parity (UIP) and current account balance. Finally, the short-run dynamic error correction model is estimated on the basis of identified cointegrated vectors. The speed of adjustment coefficient indicates that 17 percent of divergence from long-run equilibrium exchange rate path is being corrected in each quarter. US war with Afghanistan has significant impact on rupee in short run because of high inflows of US aid to Pakistan after 9/11. Finally, the parsimonious short run dynamic error correction model is able to beat the naïve random walk model at out of sample forecasting horizons. JEL Classification: F31, F37, F47 Keywords: Exchange Rate Determination, Keynesian Model, Cointegration, Out of Sample Forecasting, Random Walk Model

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Causality between VAT and economic growth in Nigeria: An ARDL bounds testing approach

Journal of Emerging Economies and Islamic Research ◽

10.24191/jeeir.v6i1.8774 ◽

2018 ◽

Vol 6 (1) ◽

pp. 55

Author(s):

Hammed Agboola Yusuf ◽

Irwan Shah Zainal Abidin ◽

Normiza Bakar ◽

Oluwaseyi Hammed Musibau

Keyword(s):

Economic Growth ◽

Time Series ◽

Error Correction ◽

Trade Openness ◽

Value Added ◽

Error Correction Model ◽

Domestic Investment ◽

Correction Model ◽

Long Run ◽

Short Run

Value Added Tax(VAT) is a consumption tax imposed at every stage of consumption level whose burden is burned by final consumer of goods and services. In most developing economies in the world, VAT as a source of revenue to the government that has been notable for its significant role in ensuring economic efficiency. However, VAT revenue has been underutilised in Nigeria due to a high level of corruption in the process of administering the tax. This study examines the impact of VAT, domestic investment and trade openness on economic growth in Nigeria from 1980 to 2016 using ARDL techniques. The research design is time series, and the data were analysed using time series unit root test, error correction model regression, short run and long run ARDL. The result found that VAT, domestic investment and trade openness had a positive and significant impact on real GDP. Also, corruption index is negative also significant in the long run. In the same vein, past value added tax had a negative and weak significant impact on real gross domestic product indicating convergence to long-run causality between economic growths and VAT and economic growth. The Error Correction Model (ECM (-1)) coefficient had a negative and statistically significant sign. This shows that 39 percent can quickly correct short-run deviation. The study, therefore, recommends that tax administrative loopholes should be plugged for tax revenue to contribute immensely to the development of the economy since past VAT had a significant impact on economic growth.

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Globalization and Economic Growth: Evidence from Nigerian Economy 1980 – 2017

GIS Business ◽

10.26643/gis.v14i3.2153 ◽

2019 ◽

Vol 14 (3) ◽

pp. 66-79

Author(s):

Cookey ◽

Boma Clement ◽

Okorie Stanley

Keyword(s):

Economic Growth ◽

Error Correction ◽

Critical Infrastructure ◽

Unit Root Test ◽

Secondary Data ◽

Multiple Regression Model ◽

Correction Model ◽

Integration Test ◽

Political Globalization ◽

Economic Institute

This study examined the effect of globalization on growth of Nigerian Economy from 1980 to 2017. The used secondary data sourced mainly from the Central Bank of Nigeria Statistical bulletin and the SWISS Economic Institute (KOF). A multiple regression model which has economy growth, proxy by real gross domestic product as the dependent variable and globalization disaggregated into overall globalization, economic globalization, social globalization, and political globalization as the independent variables was estimated using Engle-Granger (1979) Error correction model approach. The unit root test shows that all the variables are integrated of order 1(1), while the co-integration test result revealed that the variables are co-integrated. Estimates from the error correction models show that overall globalization had positive and significant effect on economic growth, while political globalization had positive, but insignificant impact on economic growth. It was therefore recommended that government should create conducive macro-economic environment and invest in critical infrastructure to position the economy for positive globalization effects.

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