scholarly journals Product Tax Revenue and Economic Growth in Nigeria: An Engle-Granger Approach, Evidence From 1981 - 2019

2020 ◽  
Vol 1 (2) ◽  
pp. 66-76
Author(s):  
Henry Ikechukwu Amalu ◽  
Thaddeus Nnaemeka Ukwueze ◽  
Loenard U. Olife ◽  
Favour Friday Irokwe
Keyword(s):  
Economic Growth ◽  
Fiscal Policy ◽  
Error Correction ◽  
Granger Causality ◽  
Unit Root ◽  
Speed Of Adjustment ◽  
Long Run ◽  
Step Procedure ◽  
Error Correction Mechanism ◽  
Short Run

Purpose: Product tax is an essential tool for governments, serving both as a revenue generator and fiscal policy instrument. The paper examines short-run and long-run relationships shared by product taxes and economic growth in Nigeria for the period, 1981 to 2019. Approach/Methodology/Design: The study checks the stationarity properties of the series by testing them for unit roots using Augmented Dickey Fuller (ADF) method and Philip-Perron unit root test. Both unit root tests indicate that the series is stationary at first difference. In view of this, the study deploys a cointegration technique, Engle-Granger two-step procedure to determine the long-run and short-run links shared by the variables of interest. The Error Correction Mechanism (ECM) estimation and the Granger causality estimations for speed of adjustment and causality of the variables were also used. Findings: The results reveal that product tax revenues and economic growth cointegrate in the long-run; while product tax revenues exert a significant positive effect on economic growth both in the short-term and long-term. The outcome of the Error Correction Mechanism (ECM) estimation shows a swift speed of adjustment to a new long-run equilibrium after a shock. The outcome of the Granger causality estimations indicates a uni-directional causality from economic growth to revenues from product taxes. Practical Implications: This study is significant at this point when the country is facing increasing economic challenges. It will be useful to policy makers who might want to explore the possibility of using product tax as a fiscal policy tool, and a source of revenue to augment the declining revenue of the government from other sources. Originality/value: The paper explores short-run and long-run relationships shared between product taxes and economic growth in Nigeria using a two-step procedure of Engle and Granger, and it verifies causality link between the later and the former.

scholarly journals Relationship between Remittance and Economic Growth in Nepal

2019 ◽  
Vol 32 (2) ◽  
pp. 249-266 ◽  
Author(s):  
Raghu Raj Kaphle
Keyword(s):  
Economic Growth ◽  
Unit Root ◽  
Policy Formation ◽  
Growth Study ◽  
Policy Makers ◽  
Effective Utilization ◽  
Independent Variables ◽  
Long Run ◽  
Error Correction Mechanism ◽  
Short Run

For the period between 1976 and 2017, this study investigates the relation from remittances and trade to economic growth. Study applied time series econometric techniques; unit root, cointegration and error correction mechanism to examine long-run and short-run association between dependent and independent variables. Outcome confirms a long-run relationship between remittance, trade and economic growth. However, no short-run causal relationship exists between remittances and economic growth, but trade showed significant influence even in the short run in GDP for the period of analysis. The paper also discusses about the effective utilization of remittances. It is hoped that the study would be helpful to government and policy makers for domestic policy formation in the area of utilization of remittances and management of migration from Nepal.

scholarly journals Impact of economic growth on international reserve holdings in Brazil

2017 ◽  
Vol 37 (3) ◽  
pp. 605-614 ◽  
Author(s):  
MOHAMMAD KASHIF ◽  
P. SRIDHARAN ◽  
S. THIYAGARAJAN
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Correction Term ◽  
International Reserves ◽  
Speed Of Adjustment ◽  
Error Correction Term ◽  
Long Run ◽  
Short Run ◽  
Using Data ◽  
The Impact

ABSTRACT This study investigated the impact of economic growth on Brazilian international reserves holdings in the context of Error Correction Mechanism using data over the 1980-2014 period. The results reveal that economic growth is highly significant. From the estimation of our model, we argue that economic growth and international reserves have positive long run relationship. Error correction estimates validated our model for error correction term is negative and statistically significant. Besides, our model suggested that economic growth has short run relationship too. The speed of adjustment is more than 40% which indicated that error correction term corrects previous year disequilibrium at the rate of 40.4%.

scholarly journals ANALISIS HUBUNGAN ANTARA INFLASI DAN PERTUMBUHAN EKONOMI: KASUS INDONESIA

2020 ◽  
Vol 3 (1) ◽  
Author(s):  
Ismail Fahmi Lubis
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Unit Root ◽  
Consumer Price Index ◽  
Sustainable Growth ◽  
Causality Test ◽  
Long Run ◽  
Augmented Dickey Fuller ◽  
Short Run ◽  
Johansen Cointegration Test

The Phenomena and trends of level of inflation which seem to be high as caused by factors or government policies whilst the level of economic growth averagely shows high and sustainable growth drawing the unusual macroeconomic condition in Indonesia. This research is conducted to find Correlation and Short-run as well as Long-run relationship between inflation and economic in Indonesia during 1968-2012. Besides, it is to find Granger-Causality between the Consumer Price Index (CPI) and Gross Domestic Product (GDP). It first tests its Unit-Root by Augmented Dickey Fuller and Dickey Fuller test, then it tests its Cointegration by Johansen Cointegration test and its causal relationship by Granger-Causality test as well as it makes mechanism of Error Correction Model (ECM). It is found both inflation and economic growth have no Unit-Root. It is found both inflation and economic growth have Correlation. It is found significantly long-run relationship through the probability value of its residual and short-run relationship through the probability value of inflation and economic growth in its differentiation. It is then found significantly one-way Granger-causality GDP causes CPI but not found one-way Granger-causality CPI causes GDP.

scholarly journals The Service Sector-Led Growth Relationship: The Case of Nigeria

2021 ◽  
pp. 90-111
Author(s):  
Ubong Edem Effiong ◽  
Joel Isaac Okon
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Error Correction ◽  
Service Sector ◽  
Domestic Product ◽  
Long Run ◽  
Error Correction Mechanism ◽  
Short Run ◽  
Bounds Test ◽  
The Impact

This paper examined the impact of the service sector on economic growth of Nigeria. The study covers the period 1981 to 2019 and data were obtained from the Central Bank of Nigeria statistical bulletin. The Augmented Dickey-Fuller unit root, Granger Causality test, Vector Autoregressive (VAR) approach, Bounds test for cointegration, and vector error correction mechanism were utilized in analysing the data. Findings of the study revealed that a bidirectional causality exist between service sector and economic growth of Nigeria. Meanwhile, the VAR result presented an evidence of weak exogeneity of the service sector in predicting economic growth. However, both broad money supply and total government expenditure exerted a significant impact on economic growth. From the impulse response function, it was discovered that economic growth responded negatively to shocks in service sector output both in the short run and in the long run; while the variance decomposition indicated that gross domestic product (a proxy for economic growth) is strongly endogenous in predicting itself in the short run while such diminishes in the long run. The Bounds test for cointegration revealed evidence of long run equilibrium relationship and the error correction mechanism revealed that 88.30% of the short run disequilibrium in the gross domestic product are corrected annually. Meanwhile, it was discovered that professional, scientific and technical services is the major contributor to economic growth as captured by its short run and long run elasticity coefficients of 0.5936 and 0.9455 respectively. The paper recommended the need for stimulating industrialization as this is the major pathway through which the service sector can positively impact economic growth.

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

2018 ◽  
Vol 19 (3) ◽  
pp. 543-555 ◽  
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.

scholarly journals Modelling the Impact of Fiscal Policy on Non‑Oil Gdp in a Resource Rich Country: Evidence from Azerbaijan

2016 ◽  
Vol 64 (6) ◽  
pp. 1869-1878 ◽  
Author(s):  
Khatai Aliyev ◽  
Bruce Dehning ◽  
Orkhan Nadirov
Keyword(s):  
Economic Growth ◽  
Fiscal Policy ◽  
Granger Causality ◽  
Public Expenditures ◽  
Causality Analysis ◽  
Tax Revenues ◽  
Long Run ◽  
Short Run ◽  
Oil Sector ◽  
The Impact

This paper analyses the impact of public expenditures and tax revenues on non‑oil economic growth in Azerbaijan for the period of 2000Q1‑2015Q2 by employing OLS, ARDL, FMOLS, DOLS, CCR and Granger Causality techniques. Different cointegration methods result in consistent results. In this study, there is strong evidence of significant long‑run positive contributions from public expenditures to non‑oil sector output. Results also show that tax revenues significantly slow down non‑oil economic growth in the long run. Granger Causality analysis finds the existence of a bidirectional short‑run association between non‑oil GDP and public expenditures, while tax revenues Granger Cause both variables. The research findings should be useful for Azerbaijan fiscal policy makers to consider now and in the future. Current plans in Azerbaijan for both public expenditure cuts and tax revenue increases are likely to cause contraction in the Azerbaijan’s non‑oil sector GDP.

The relationship between financial development and economic growth in Eswatini (formerly Swaziland)

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Siphe-okuhle Fakudze ◽  
Asrat Tsegaye ◽  
Kin Sibanda
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Financial Development ◽  
Granger Causality Test ◽  
Causality Test ◽  
Content Type ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Relationship

PurposeThe paper examined the relationship between financial development and economic growth for the period 1996 to 2018 in Eswatini.Design/methodology/approachThe Autoregressive Distributed Lag bounds test (ARDL) was employed to determine the long-run and short-run dynamics of the link between the variables of interest. The Granger causality test was also performed to establish the direction of causality between financial development and economic growth.FindingsThe ARDL results revealed that there is a long-run relationship between financial development and economic growth. The Granger causality test revealed bidirectional causality between money supply and economic growth, and unidirectional causality running from economic growth to financial development. The results highlight that economic growth exerts a positive and significant influence on financial development, validating the demand following hypothesis in Eswatini.Practical implicationsPolicymakers should formulate policies that aims to engineer more economic growth. The policies should strike a balance between deploying funds necessary to stimulate investment and enhancing productivity in order to enliven economic growth in Eswatini.Originality/valueThe study investigates the finance-growth linkage using time series analysis. It determines the long-run and short-run dynamics of this relationship and examines the Granger causality outcomes.

scholarly journals An econometric analysis of the effectiveness of fiscal and monetary policies in India

2021 ◽  
Author(s):  
Anand Nadar
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Fiscal Policy ◽  
Money Supply ◽  
Series Data ◽  
Monetary Policies ◽  
Indian Economy ◽  
Long Run ◽  
Short Run ◽  
Bound Test

This study investigatesthe effectiveness of fiscal policy and monetary policy in India. We collected thetime series data for India ranging from 1960 to 2019 from World Development Indicator (WDI). Weapplied the bound test co-integration approach to check the long-run relationship between fiscalpolicy, monetary policy, and economic growth in the context of Indian economy. The short-run andlong-run effects of fiscal policy and monetary policy have been estimated using ARDL models. Theresults showed that there is a long-run relationship between fiscal and monetary policies witheconomic growth. The estimated short-run coefficients indicated that a few immediate short runimpacts of fiscal and monetary policies are insignificant. However, the short-run impacts becomesignificant as time passes. The long-run results suggested that the long-run impact of both fiscal andmonetary policies on economic growth are positive and significant. More specifically, the GDP levelincreases if the money supply and government expenditure increase (Expansionary fiscal andmonetary policies). On the other hand, the GDP level decreasesif the money supply and governmentexpenditure decrease (contractionary fiscal and monetary policies). Therefore, this studyrecommends to use expansionary policies to spur the Indian economy.

scholarly journals Dynamic Relationship Between Energy and Economic Growth: Evidence from D8 Countries.

2011 ◽  
Vol 50 (4II) ◽  
pp. 437-458 ◽  
Author(s):  
Sarwat Razzaqi ◽  
Faiz Bilquees ◽  
Saadia . Sherbaz
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Energy Use ◽  
Demand And Supply ◽  
Dynamic Relationship ◽  
Long Run ◽  
Production And Consumption ◽  
Short Run ◽  
Oil Embargo ◽  
The Relationship

Energy sector has a vital influence on an economy, on both demand and supply sides. Therefore, energy production and consumption bear great importance for the developing world. The oil embargo of 1970‘s and its impact on major macroeconomic variables throughout the world attracted many economists to examine the relationship between energy and economic prosperity. The researchers have been unable to establish a definitive direction of causality between the two variables. The purpose of this study is to empirically investigate the dynamic relationship between energy use and economic growth in the D8 countries. The evidence gathered through application of VAR Granger Causality, Johansen Cointegration and VECM proves existence of short-run and long-run correlation between energy use and economic development in all countries. The results supported either uni-directional or bi-directional causality in the D8 countries except for Indonesia in short-run where non-causality was established between the two variables. JEL classifications: C22; Q43. Keywords: Energy Use, Economic Growth, D8, VAR Granger Causality, Cointegration, VECM

scholarly journals TRADE OPENNESS AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM INDIA

2014 ◽  
Vol 16 (1) ◽  
pp. 188-205 ◽  
Author(s):  
Qazi Muhammad Adnan Hye ◽  
Wee-Yeap Lau
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Granger Causality ◽  
Trade Openness ◽  
Granger Causality Test ◽  
Causality Test ◽  
Long Run ◽  
Rolling Window ◽  
Short Run ◽  
The Impact

The main objective of this study is to develop first time trade openness index and use this index to examine the link between trade openness and economic growth in case of India. This study employs a new endogenous growth model for theoretical support, auto-regressive distributive lag model and rolling window regression method in order to determine long run and short run association between trade openness and economic growth. Further granger causality test is used to determine the long run and short run causal direction. The results reveal that human capital and physical capital are positively related to economic growth in the long run. On the other hand, trade openness index negatively impacts on economic growth in the long run. The new evidence is provided by the rolling window regression results i.e. the impact of trade openness index on economic growth is not stable throughout the sample. In the short run trade openness index is positively related to economic growth. The result of granger causality test confirms the validity of trade openness-led growth and human capital-led growth hypothesis in the short run and long run.

Sign in / Sign up

Export Citation Format

Share Document