A Causal Analysis between Construction Flows and Economic Growth: Evidence from India

2011 ◽  
Vol 12 (2) ◽  
pp. 27-42
Author(s):  
Aviral Kumar Tiwari
Keyword(s):  
Economic Growth ◽  
Standard Deviation ◽  
Structural Breaks ◽  
Negative Impact ◽  
Positive Impact ◽  
Causality Test ◽  
Positive Direction ◽  
Dynamic Framework ◽  
Long Run ◽  
The Impact

The study examined the causal relationship between construction flows and economic growth under a static and dynamic framework by employing the Engel-Granger and IRFs approach with incorporation of endogenously determined structural breaks. The static causality test result provided the evidence of bidirectional Granger-causality between construction flows and economic growth in India. The dynamic causality analysis indicated that for the first ten years, a standard deviation innovation in construction had positive impact on the GDP, while the long-run impact was negative. However, a standard deviation shock/innovation in GDP had a negative impact on the construction flows of the economy for the first 10 years of the period under shock analysis, while for the long-run, the impact was in the positive direction.

FINANCIAL INTEGRATION, ENERGY CONSUMPTION AND ECONOMIC GROWTH IN VIETNAM

2020 ◽  
Vol 15 (03) ◽  
pp. 2050010
Author(s):  
NGUYEN MINH HA ◽  
BUI HOANG NGOC ◽  
MICHAEL MCALEER
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Financial Integration ◽  
Positive Impact ◽  
Vector Autoregressions ◽  
Bounds Testing ◽  
Causality Test ◽  
Empirical Results ◽  
Long Run ◽  
The Impact

The paper investigates the impact of financial integration and energy consumption on economic growth in Vietnam during the period 1986–2017. By applying the Autoregressive Distributed Lag ARDL) approach proposed by Pesaran et al. [Pesaran, MH, Y Shin and RJ Smith (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326.] and the bounds cointegration test, the empirical results show the existence of long-term cointegration among all the variables, and that an increase in financial integration leads to an increase in economic growth in the long run. There is a positive impact of energy consumption on growth in both the short run and long run. The causality test of Toda and Yamamoto [Toda, HY and T Yamamoto (1995). Statistical inference in vector autoregressions with possibly integrated processes. Journal of Econometrics, 66(1–2), 225–250.] confirm that there is bi-directional causality between the pairs, financial integration and economic growth, and energy consumption and growth, which support the feedback hypothesis. However, there is only uni-directional causality from energy consumption to financial integration. The empirical results should be of major empirical importance for public policy decision-makers to plan sustainable development goals for Vietnam.

scholarly journals The asymmetric and threshold impact of external debt on economic growth: new evidence from Egypt

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mesbah Fathy Sharaf
Keyword(s):  
Economic Growth ◽  
Structural Breaks ◽  
Negative Impact ◽  
External Debt ◽  
Threshold Level ◽  
Substantial Contribution ◽  
Content Type ◽  
Long Run ◽  
The Impact ◽  
Nardl Model

PurposeWithin a multivariate framework, this study examines the asymmetric and threshold impact of external debt on economic growth in Egypt during the period 1980–2019.Design/methodology/approachThe paper uses a nonlinear autoregressive distributed lag (NARDL) bounds testing approach to cointegration and a vector error-correction model to estimate the short- and long-run parameters of equilibrium dynamics. A multiple structural breaks model is estimated to test nonlinearity in the relationship between external debt and economic growth.FindingsResults of the NARDL model show a robust statistically significant negative long-run impact on economic growth stemming from both positive and negative external-debt-induced shocks. In terms of magnitude, on the one hand, the impact of external-debt-induced negative shocks exceeds that of the positive. In the short and long run, on the other hand, the growth impact of external debt in Egypt is symmetric. There is also support for the nonlinearity hypothesis in which a negative impact on growth of external debt obtains once the threshold level of external debt-to-GDP ratio equals or exceeds 96.7%.Practical implicationsIdentifying the threshold level after which external debt becomes harmful to economic growth would help inform policymakers in Egypt about maximum external debt levels that can be sustained without impairing economic growth.Originality/valueThe current study makes a substantial contribution to the extant literature on the debt-growth tradeoffs. It breaks ground by being the first tract that examines, using a NARDL model, asymmetry and nonlinearity of debt-growth tradeoffs in Egypt.

Is Fiscal Deficit Essential for Stimulating Economic Growth in Developing Economies? Theory and Empirical Evidence from India

2021 ◽  
Keyword(s):  
Economic Growth ◽  
Developing Economies ◽  
Negative Impact ◽  
Gdp Growth ◽  
Fiscal Deficit ◽  
Causality Test ◽  
Long Run ◽  
Integration Test ◽  
The Government ◽  
The Impact

The primary purpose of this paper was to assess the impact of fiscal deficit on the economic growth of the Indian economy and find out the causality between fiscal deficit and economic growth from 1981-82 to 2019-20. To analyse the long-run relationship between the variables Johansen Co-integration test was used; after verifying the existence of long-run relationship among variables, the Vector Error Correction Model (VECM) was used, and the Granger Causality test was also used for investigating the direction of causality between pair of variables. The findings of the study supported the ideology of classical economists in which they neglected the government intervention for the growth and development of an economy. The results showed that in long run, fiscal deficit had a significant negative impact on economic growth as one percent increase in fiscal deficit demoted the GDP growth rate by 0.075 percent, whereas in the short run, the impact was also found negative, but it was significant only one lag. Simultaneously, there was unidirectional causality found from fiscal deficit to GDP growth.

scholarly journals The Impact of Environmental Regulations, Corruption and Economic Freedom on Economic Growth: Empirical Evidence from China

2017 ◽  
Vol 9 (11) ◽  
pp. 92 ◽  
Author(s):  
Najla Shariff Omar Al Baiti ◽  
Navaz Naghavi ◽  
Benjamin Chan Yin Fah
Keyword(s):  
Economic Growth ◽  
Economic Freedom ◽  
Quantitative Methods ◽  
Negative Impact ◽  
Positive Impact ◽  
Environmental Regulations ◽  
Unit Root Test ◽  
Long Run ◽  
Short Run ◽  
The Impact

The purpose of this study is to investigate the impact of environmental regulations, corruption and economic freedom on economic growth in China. Different indices were used as measurements of the variables; Environmental Policy Stringency Index, Control of Corruption Index and Economic Freedom of the World Index. The study uses quantitative methods to empirically determine which factors play a role in China’s progressive economic growth rates. Unit root test, Johansen cointegration and the Autoregressive Distributed Lag (ARDL) modelling were applied to examine the short and long run correlations. Results indicated that there is in fact a correlation between environmental regulations, corruption, economic freedom and economic growth. Long run coefficients demonstrated that environmental regulations had a negative impact on economic growth, while corruption and economic freedom displayed positive results. However, short run coefficients showed that environmental regulation is insignificant in the short run, corruption maintains a positive impact and economic freedom negatively effects economic growth in the short run.

scholarly journals Finance–Growth Nexus in Nepal: An Application of the ARDL Approach in the Presence of Structural Breaks

2018 ◽  
Vol 43 (4) ◽  
pp. 236-249 ◽  
Author(s):  
Jagadish Prasad Bist ◽  
Nar Bahadur Bista
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Structural Breaks ◽  
Negative Impact ◽  
Positive Impact ◽  
Trade Openness ◽  
Trade Deficit ◽  
Investment Policies ◽  
Long Run ◽  
Short Run

Executive Summary A healthy financial system is important for the growth process of an economy. It affects growth by influencing the saving, investment and technological innovations. In fact, researchers argue that low-income countries like Nepal need a much more robust and active financial system when compared to the developed world. Therefore, this study examines the relationship between financial development and economic growth using annual time series data for Nepal during the period 1984–2014. Because Nepal has a bank-based economy, the study used credit issued by banking and financial institutions to the private sector as the proxy for financial development. The economic growth has been measured using real gross domestic product (GDP) growth and real GDP per capita growth (constant 2005 US$). The autoregressive distributed lag (ARDL) bounds testing approach is used to investigate the cointegration among variables in the presence of structural breaks. The study used Zivot and Andrews’ (ZA) unit root test in order to find the structural breaks in the variables. The study finds that the structural change in private credit took place in 2007 when the government of Nepal and Maoists (the then rebels) signed a Comprehensive Peace Agreement and the Maoist rebels joined the interim government, which formally ended the 10 years long civil war in Nepal. Similarly, the study observes break points in real GDP growth and per capita growth in 2001 when the Royal Massacre and a state of emergency took place in Nepal. After allowing for structural breaks, the study finds evidence of a cointegration relationship between financial development and economic growth when economic growth is used as the dependent variable. Thus, it can be argued that the long-run causality is unidirectional from financial development to economic growth in Nepal. The estimates of the ARDL approach suggest that financial development has a significant positive impact on economic growth in both long run and short run. However, the estimates show that gross domestic saving, a control variable, has a negative impact on economic growth in Nepal. It clearly indicates that Nepal has long not been able to utilize the savings in the productive sector. The political instability, poor investment policies and securities and hence the lack of foreign investment and lack of technological innovations could be the causes for Nepal not benefiting from the country’s savings. It is also found that trade openness has a negative relationship with economic growth in the long run: possibly the cause of the persistent trade deficit of Nepal with the rest of the world. However, in the short run, the result shows a positive relationship between trade openness and growth. In fact, it is found that the magnitude of the positive impact of trade openness in the short run is higher than the magnitude of its negative impact in the long run. Thus, the policymakers should give more emphasis on trade and investment policies that could reduce the prolonged trade deficit and help the nation in getting long-term benefits from international trade.

scholarly journals The impact of Chinese Foreign Direct Investment on economic growth of Peru

2020 ◽  
Vol 3 (6) ◽  
pp. 32
Author(s):  
María Osterloh Mejía ◽  
Nadia Urriola Canchari ◽  
Xiangzheng Deng
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Positive Impact ◽  
Local Economy ◽  
Series Data ◽  
Causality Test ◽  
Long Run ◽  
Integration Test ◽  
The Impact

Since 2000, the Peruvian economic policy presented a positive impact on the economic growth thanks to Foreign Direct Investment (FDI) increase and the inclusion of foreign markets in the local economy. This study analyzes and quantifies the short and long-run impact of FDI and Foreign Direct Investment from China (FDICH) on economic growth in Peru, using annual time series data from 2001 to 2018 obtained from the Central Bank of Peru and the World Bank. Vector Autoregression (VAR) Model, Augmented Dickey-Fuller test, Johansen Co-integration test, and Granger Causality test were employed for data analysis through the production function. The findings revealed the impact and significance of FDI and FDICH in the short and long-run, which were positive and significant. Moreover, the Co-integration test (for long-run relationship) was positive, and the causality test in the relationship between all variables and the economic growth revealed the directionality of these links.

The nexus between financial development and energy consumption: Estimating the role of foreign direct investment, economic growth and urbanization

2021 ◽  
pp. 0958305X2110453
Author(s):  
Jaleel Ahmed ◽  
Shuja ur Rehman ◽  
Zaid Zuhaira ◽  
Shoaib Nisar
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Energy Consumption ◽  
Financial Development ◽  
Latin American ◽  
Direct Investment ◽  
Negative Impact ◽  
Positive Impact ◽  
Supply And Demand ◽  
The Impact

This study examines the impact of financial development on energy consumption for a wide array of countries. The estimators used for financial development are foreign direct investment, economic growth and urbanization. The study employed a panel data regression on 136 countries with time frame of years 1990 to 2019. The model in this study deploys system GMM technique to estimate the model. The results show that financial development has a significant negative impact on energy consumption overall. Foreign direct investment and urbanization has significant impact on energy consumption. Also, economic growth positive impact on energy consumption its mean that economic growth promotes energy consumption. When dividing further the sample into different groups of regions such as Asian, European, African, North/Latin American and Caribbean countries then mixed results related to the nexus between financial development and energy consumption with respect to economic growth, urbanization and foreign direct investment. The policymakers in these different groups of countries must balance the relationship between energy supply and demand to achieving the sustainable economic development.

Relationship between Budget Deficit and Economic Growth: Evidence from Ethiopia

2021 ◽  
Vol 2 (2) ◽  
pp. 10-15
Author(s):  
Desalegn Emana
Keyword(s):  
Economic Growth ◽  
Interest Rates ◽  
Budget Deficit ◽  
Time Series Data ◽  
Negative Impact ◽  
Positive Impact ◽  
Negative Relationship ◽  
Nominal Exchange Rate ◽  
Series Data ◽  
Long Run

This study examined the relationship between budget deficit and economic growth in Ethiopia using time series data for the period 1991 to 2019 by applying the ARDL bounds testing approach. The empirical results indicate that budget deficit and economic growth in Ethiopia have a negative relationship in the long run, and have a weak positive association in the short run. In line with this, in the long run, a one percent increase in the budget deficit causes a 1.43 percent decline in the economic growth of the country. This result is consistent with the neoclassical view which says budget deficits are bad for economic growth during stimulating periods. Moreover, in the long run, the variables trade openness and inflation have a positive impact on Ethiopian economic growth, and on the other hand, the economic growth of Ethiopia is negatively affected by the nominal exchange rate in the long run. Apart from this, in the long run, gross capital formation and lending interest rates have no significant impact on the economic growth of the country. Therefore, the study recommends the government should manage its expenditure and mobilize the resources to generate more revenue to address the negative impact of the budget deficit on economic growth.

scholarly journals HIGHER EDUCATION AND ECONOMIC GROWTH A CASE STUDY OF PAKISTAN

2010 ◽  
Vol 27 (1) ◽  
Author(s):  
Tariq Mahmood
Keyword(s):  
Higher Education ◽  
Economic Growth ◽  
Positive Impact ◽  
Public Expenditures ◽  
Annual Data ◽  
Unequal Distribution ◽  
Long Run ◽  
Short Run ◽  
The Impact ◽  
Education And Economic Growth

This paper highlights the role of higher education for the economic growth inPakistan. We explore the impact of increase in enrolment at tertiary level on thegrowth rate of income per worker. Estimating a growth model developed byMankiv et. al. (1992), using the annual data of Pakistan, we find a robustrelationship between higher education and economic growth in the long run. Themodel has also shown that investment in fixed capital has positive impact oneconomic uplift. Applying Johansen’s cointegration test, we show that the longrun elasticity of income with respect to capital stock is different from its share inGDP, and increase in the enrolment per unit of effective worker helps inbolstering economic growth. But, like earlier literature we also find statisticallyinsignificant relationship between higher education and GDP per worker. Thereare some fundamental reasons concerning to the ambiguous impact of investingin human capital on economic growth, particularly in the short run in case ofPakistan. First, the sharp increase in enrollment, recently, has been damaging thequality of education. Second, the unequal distribution of educational services hasheld back the efficiency of public expenditures, particularly before the reformsundertaken by higher education commission. Third, the low private return ofeducation has limited the demand for higher education in Pakistan for almost fiftyyears.

scholarly journals Impact of Domestic Public Debt on Economic Growth - An Empirical Study in the Indian Context

2016 ◽  
Vol 6 (4) ◽  
pp. 101-116
Author(s):  
Srinivasa Rao Gangadharan ◽  
Lakshmi Padmakumari
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Positive Impact ◽  
Least Square ◽  
Distributed Lag ◽  
Long Run ◽  
Domestic Debt ◽  
Integration Test ◽  
Ordinary Least Square Regression ◽  
The Impact

This study is an empirical investigation to assess the impact of domestic debt on India’s Economic growth during the period 1980 – 2014. We use data on Domestic Debt, Net Fiscal Deficit, Exports, Savings, Real Gross Domestic Product, Population and Terms of Trade. This study adopts the ARDL Co-Integration and Granger Causality techniques to investigate the relation between the key variables. The study also employs various post estimation tests to validate the fitness and stability of the models based on Gauss Markov assumptions, after employing the ordinary least square regression on various models. We find that debt negatively impacts economic growth while savings has a positive impact. The Auto Regressive Distributed Lag (ARDL) technique used to test the robustness suggests existence of co-integration among the variables. However, none of the long run co-efficient is significant. The granger causality and co-integration test results support the traditional view that debt negatively impacts economic growth.

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