scholarly journals Exploring the Influence of Commodity Prices, Real Exchange Rate and Trade Openness on Economic Performance in an Emerging Country

2021 ◽  
Vol 12 (5) ◽  
pp. 80
Author(s):  
Ipeleng Ntshwe ◽  
Rufaro Garidzirai
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Trade Openness ◽  
Commodity Prices ◽  
Vector Error Correction Model ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error ◽  
Johansen Cointegration

Do commodity prices, real exchange rate and trade openness influence economic growth in South Africa? This question is fundamental to academic research since it forms the basis of macroeconomic policies. Therefore, the comprehension of such a relationship is vital which has ushered this study into investigating the effect of real exchange rate, commodity prices and trade openness on economic growth in South Africa from 1984-2019. The purpose of this study is to contribute to the diverse literature on macroeconomics and international trade in the continent and the rest of the world. To achieve this, the Johansen cointegration method and Vector Error Correction Model were employed. The Johansen cointegration method confirmed the existence of a long-run relationship among the variables. Commodity prices and trade openness positively influenced economic growth while real exchange rate inversely influenced economic growth. The Vector Error Correction Model also confirmed that the disequilibrium in the model can be corrected in 1 year 9 months. The study`s findings suggest a methodical monetary policy synthesis that controls both the commodity price stability and exchange rate that spurs economic growth.

scholarly journals ANALISIS DAMPAK KEBIJAKAN MONETER TERHADAP VARIABEL MAKROEKONOMI DI INDONESIA (PENERAPAN VECTOR ERROR CORRECTION MODEL)

IQTISHODUNA ◽  
2011 ◽  
Vol 3 (1) ◽  
Author(s):  
Umi Julaihah, SE., M.Si,
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Impulse Response Function ◽  
Variance Decomposition ◽  
Vector Error Correction Model ◽  
Correction Model ◽  
Vector Error Correction ◽  
Macroeconomic Variables ◽  
Vector Error ◽  
Policy Variable

The objectives of this study are to analyze the effect of monetary policy on Indonesian economy and to know policy variable such as monetary aggregate that have contribution in explain the variability of macroeconomic variables. The data sample used in this study are quarterly time series data from 1983.1 - 2003.2. Those data are base money, one month commercial bank deposit interest rate, consumer price index, gross domestic product, and exchange rate (rupiah/dollar). A method of analysis in this study is Vector Error Correction Model (VECM). The advantages of VECM are because it has: (i) impulse response function that can trace the response of one endogen variable because shock/innovation of others variables in the model; (ii) variance decomposition that can show the contribution of one variable endogen in explained the variability of others endogen variables. The result of impulse response function shows that economic growth did not response the shock of base money. Although base money has significant effect on inflation but this model leaves a price puzzle and liquidity puzzle. The result of variance decomposition shows that base money contributes only 5% on inflation but it did not give any contribution on economic growth fluctuation. The interesting result is policy variables (base money) have best contribution in explain the fluctuation on exchange rate. Then, it asserts that shock of policy variable is responded by exchange rate faster than other macroeconomic variables.

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

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.

scholarly journals Relationship between Trade Openness and Inflation: Empirical Evidences from Pakistan (1976-2010).

2011 ◽  
Vol 50 (4II) ◽  
pp. 853-876 ◽  
Author(s):  
Sehar Munir ◽  
Adiqa Kausar Kiani
Keyword(s):  
Error Correction ◽  
Trade Openness ◽  
Value Added ◽  
Error Correction Model ◽  
Series Data ◽  
Vector Error Correction Model ◽  
Correction Model ◽  
Vector Error Correction ◽  
Unit Root Testing ◽  
Vector Error

This study empirically verifies the existence of significant relationship between inflation and trade openness for Pakistan using annual time-series data for the period of 1976 to 2010. The basic objective of this study is to examine the Romer‘s hypothesis for Pakistan with real agriculture value added, real exchange rate, real gross domestic product, financial market openness, money and quasi money and used trade openness, import openness and export openness ratios separately as explanatory variables with inflation rate as dependent variables. For this purpose, we have used multivariate Johansen (1998) and Johansen and Juselius (1990) Maximum Likelihood Cointegration Approach and a Vector Error Correction Model (VECM) and the expected empirical findings shows that there is a significant positive long-run relationship between inflation and trade openness, which rejects the existence of Romer‘s hypothesis for Pakistan. JEL classification: B26, E31, P24, P44 Keywords: Trade Openness, Inflation, Unit Root Testing, Multivariate Cointegration Approach, Vector Error Correction Model, Pakistan

scholarly journals Impact of conventional banking financing and Islamic banking financing on economic growth 2008-2018

2020 ◽  
Vol 6 (6) ◽  
pp. 1272
Author(s):  
Hasymi Nur Baehaqy ◽  
Eko Fajar Cahyono
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Significant Relationship ◽  
Sampling Technique ◽  
Error Correction Model ◽  
Islamic Banking ◽  
Vector Error Correction Model ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error

This research aims to know Impact of conventional banking financing and Islamic banking financing on economic growth 2008-2018. In this study the authors used a saturated sampling technique found in Non-Probability Sampling. The analysis technique used is VECM (Vector Error Correction Model). Based on the results of the study indicate that there is a one-way relationship on several variables, namely Conventional Banking Financing to GDP and Conventional Banking Financing to Islamic Banking Financing, In the long run, Conventional Banking Financing has a positive and significant relationship to GDP, whereas Islamic Banking Financing has a negative and significant relationship to GDP.Keywords: Banking Financing, Economic Growth, GDP (Gross Domestic Product), VECM (Vector Error Correction Model)

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