scholarly journals NONLINEAR ADJUSTMENTS IN THE EXPORT-LED GROWTH HYPOTHESIS: RE-EXAMINING THE HUNGARIAN CASE

2020 ◽  
Vol 18 (2) ◽  
Author(s):  
Ivan Novak
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Model Specification ◽  
Asymmetric Effect ◽  
Correction Model ◽  
Novel Approach ◽  
Long Run ◽  
Hungarian Case ◽  
Growth Hypothesis

This paper aims to examine the non-linear adjustments between exports and gross domestic product (GDP) in Hungary. In order to test the export-led growth hypothesis in the Hungarian economy this research analyses data from 1996Q1-2016Q4. Applying relatively novel approach to export-led growth hypothesis likely nonlinear asymmetric effect of exports and GDP toward their long-run equilibrium is tested. The results disclose a threshold cointegrating connection between the selected variables providing more insights into export led growth hypothesis. Unlike previous studies, research results reveal unidirectional and bidirectional causality in the long-run Hungarian exports-growth nexus which depends on the regime process with significantly different error correction adjustments in normal and stress regimes. Exports is found to be an engine of economic growth in Hungary for entire period but in times of stress when domestic demand contracts the role of exports in economic growth becomes more prominent and takes the basic form of export led growth hypothesis. Empirical results in this paper clearly points that threshold cointegration approach offers deeper insights than the linear error-correction model and might be the proper model specification to examine export led growth hypothesis.

Enhancing Economic Growth and Government Revenue Generation in Nigeria: The Role of Diaspora Remittances

2021 ◽  
pp. 003464462110256
Author(s):  
Dal Didia ◽  
Suleiman Tahir
Keyword(s):  
Economic Growth ◽  
Parameter Estimates ◽  
Gross Domestic Product Growth ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Short Run ◽  
The Empirical Analysis

Even though remittances constitute the second-largest source of foreign exchange for Nigeria, with a $24 billion inflow in 2018, its impact on economic growth remains unclear. This study, therefore, examined the short-run and long-run impact of remittances on the economic growth of Nigeria using the vector error correction model. Utilizing World Bank data covering 1990–2018, the empirical analysis revealed that remittances hurt economic growth in the short run while having no impact on economic growth in the long run. Our parameter estimates indicate that a 1% increase in remittances would result in a 0.9% decrease in the gross domestic product growth rate in the short run. One policy implication of this study is that Nigeria needs to devise policies and interventions that minimize the emigration of skilled professionals rather than depending on remittances that do not offset the losses to the economy due to brain drain.

International Trade and Economic Performance in Tanzania: Further Evidence

2021 ◽  
pp. 1-17
Author(s):  
Ally A. L. Kilindo
Keyword(s):  
Economic Growth ◽  
International Trade ◽  
Economic Performance ◽  
Trade Restrictions ◽  
Correction Model ◽  
Spurious Regression ◽  
Long Run ◽  
Reform Period ◽  
Manufactured Goods

Abstract The study investigated the role of international trade in economic performance in Tanzania for the post reform period, from 1980 to 2018. International trade is measured by disaggregated imports and exports while economic performance is measured by GDP growth. Exports are disaggregated into manufactured goods and non-manufactured goods while imports are disaggregated into capital goods and intermediate goods. To obtain robust non-spurious regression results, Dickey-Fuller (D-F) and Phillips-Peron (PP) Unit Root tests were performed. Johansen Co-integration tests were employed to investigate long-run relationships between export, imports and economic growth. The Johansen test suggested a long-run relationship between international trade and its components and economic development. In addition, the Error Correction Model (ECM) results further supported a long-run relationship between international trade and economic growth in Tanzania. This calls for further opening of the economy and further liberalisation of trade restrictions.

Exports, financial development and economic growth in Pakistan

2014 ◽  
Vol 13 (2) ◽  
pp. 155-170 ◽  
Author(s):  
Muhammad Shahbaz ◽  
Mohammad Mafizur Rahman
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Financial Development ◽  
Error Correction Model ◽  
Causality Analysis ◽  
Bounds Testing ◽  
Causality Test ◽  
Correction Model ◽  
Content Type ◽  
Long Run

Purpose – This paper aims to explore the relationship between exports, financial development and economic growth in case of Pakistan. Design/methodology/approach – The autoregressive distributed lag bounds testing approach to cointegration and error correction model are applied to test the long-run and short-run relationships, respectively. The direction of causality between the variables is investigated by the vector error correction model Granger causality test and robustness of causality analysis is tested by applying innovative accounting approach. Findings – The analysis confirms cointegration for the long-run relation between exports, economic growth and financial development in case of Pakistan. The results indicate that economic growth and financial development spur exports growth in Pakistan. The causality analysis reveals feedback hypothesis that exists between financial development and economic growth, financial development and exports, and, exports and economic growth. Originality/value – This study provides new insights for policy makers to sustain exports growth by stimulating economic growth and developing financial sector in Pakistan.

Globalization and Aid Inflows in the Economic Growth of Vietnam

2017 ◽  
Vol 17 (2) ◽  
pp. 20160063
Author(s):  
Jai S Mah
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Empirical Evidence ◽  
Economic Reform ◽  
Rapid Growth ◽  
Error Correction Model ◽  
Variance Bounds ◽  
Correction Model ◽  
Bounds Test ◽  
Growth Hypothesis

This paper aims to reveal the sources of the rapid growth of the Vietnamese economy since economic reform over the period 1986–2013. It applies the autoregressive distributed lags variance bounds test and the error correction model, focusing on the roles of globalization and aid in economic growth. The empirical evidence supports neither the export-led nor the FDI-led economic growth hypothesis. Rather, the increase in import values is revealed to have caused economic growth. When the import variable is excluded from the estimated model, aid inflows are shown to have caused the economic growth in Vietnam.

scholarly journals ANALISIS FAKTOR-FAKTOR YANG MEMPENGARUHI UTANG LUAR NEGERI DI INDONESIA

Jurnal Ecogen ◽  
2019 ◽  
Vol 1 (3) ◽  
pp. 482
Author(s):  
Defrizal Saputra ◽  
Hasdi Aimon ◽  
Melti Roza Adry
Keyword(s):  
Economic Growth ◽  
Interest Rates ◽  
Error Correction ◽  
Foreign Debt ◽  
Secondary Data ◽  
Error Correction Model ◽  
Short Term ◽  
Correction Model ◽  
Descriptive Research ◽  
Long Run

This study aims to determine and analyze the factors that influence foreign debt in Indonesia with variables that effect economic growth, inflation, and foreign interest rates. This type of research is associative descriptive research, where the data used is secondary data from 1970 to 2017 obtained from institutions and related institutions, which are analyzed using the Error Correction Model (ECM) method. This study initially used the Ordinary Lest Square (OLS) method to see long-term, and used ECM because it wanted to see short-term at the same time. The findings of this study indicate that economic growth and inflation have a significant effect in the long run, but the interest rates have no significant effect, and in the short term all have a significant effect on foreign debt in Indonesia. Keywords: foreign debt, economic growth, inflation, interest rates and error correction model (ECM)

scholarly journals Does Uncertainty Matter for Trade - Economic Growth Nexus in Indonesia?

2021 ◽  
Vol 67 (1) ◽  
pp. 147
Author(s):  
Panky Tri Febiyansah ◽  
Bintang Dwitya Cahyono ◽  
Rio Novandra
Keyword(s):  
Economic Growth ◽  
Causal Relationship ◽  
Output Growth ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
The Impact ◽  
The Relationship

This paper aims to test the impact of uncertainty on the causal relationship among exports, imports, and economic growth in Indonesia. The relationship is constructed by examining the presence of FDI-adjusted exports and imports (trade) and the output link using conditional variances-covariances derived from the generalized autoregressive conditional heteroskedastic (GARCH) process in a vector error correction model (VEC-GARCH model). Using evidence in Indonesia, the model exposes the uni-directional nexus from trade performance to trade-adjusted output growth in the absence of uncertainty. The volatility effects are evident in the causal relationship between trade and output. The finding shows that the uncertainty effects hamper the trade-economic growth nexus. Incorporated with the long-run causality, trade still causes output even after containing the contributions of volatility. The significant role of imports highlights the higher demand for intermediate capital products and the inclusion of technology in strengthening economic growth.

scholarly journals The Long-Run and Short-Run Impacts of Investment, Export, Money Supply, and Inflation on Economic Growth In Indonesia

2019 ◽  
Vol 22 (1) ◽  
Author(s):  
Erni Panca Kurniasih
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Error Correction ◽  
Money Supply ◽  
Time Series Data ◽  
Error Correction Model ◽  
Series Data ◽  
Correction Model ◽  
Long Run ◽  
Short Term Investment

ABSTRACTThe development of investment and exports in Indonesia shows an increase, as well as money supply, while the inflation rate shows a decline, but this is not always followed by increasing economic growth. This study aims to explain the relationship between investment, export, money supply and inflation with the economic growth in Indonesia. The data used was time series data from the first quarter in 2001 to the fourth quarter in 2014 and was analyzed using multiple regression models with Error Correction Model (ECM) and classical assumptions. The study findings show that in short-term investment, export, money supply and inflation are not significant to economic growth. In long-run, investment has negative and significant effect on the economic growth, while export, money supply and inflation have positive and significant effect on the economic growth in Indonesia. Bank Indonesia must applied a tight money policy consistently to achieve the long-term inflation target ABSTRAKPerkembangan investasi dan ekspor di Indonesia menunjukkan peningkatan, demikian pula jumlah uang beredar, sementara tingkat inflasi menunjukkan penurunan, namun hal tersebut tidak selalu diikuti dengan meningkatnya pertumbuhan ekonomi. Studi ini bertujuan untuk menjelaskan hubungan antara investasi, ekspor neto, jumlah uang beredar dan inflasi terhadap pertumbuhan ekonomi di Indonesia. Data yang digunakan adalah data time series dari kuartal pertama tahun 2001 hingga kuartal keempat tahun 2014 dan dianalisa dengan menggunakan model regresi berganda dengan Error Correction Model (ECM). Hasil studi menunjukkan  bahwa investasi, ekspor, jumlah uang beredar dan inflasi tidak signifikan terhadap pertumbuhan ekonomi di Indonesia dalam jangka pendek. Investasi berpengaruh negatif dan signifikan terhadap pertumbuhan ekonomi di Indonesia dalam jangka panjang, sedangkan ekspor , jumlah uang beredar dan inflasi berpengaruh positif dan  signifikan terhadap pertumbuhan ekonomi di Indonesia. Bank Indonesia harus menerapkan kebijakan moneter yang ketat secara konsisten pada pencapaian sasaran inflasi jangka menenngah 

scholarly journals REAL STOCK PRICES AND THE LONG-RUN MONEY DEMAND FUNCTION IN MALAYSIA: Evidence from Error Correction Model

2004 ◽  
Vol 6 (2) ◽  
pp. 293
Author(s):  
Naziruddin Abdullah ◽  
M. Shabri Abd. Majid
Keyword(s):  
Error Correction ◽  
Money Demand ◽  
Stock Prices ◽  
Positive Association ◽  
Error Correction Model ◽  
Money Market ◽  
Correction Model ◽  
Long Run ◽  
One Year

This study adopts the error correction model to empirically investigate the role of real stock prices in the long run-money demand in the Malaysian financial or money market for the period 1977: Q1-1997: Q2. Specifically, an attempt is made to check whether the real narrow money (M1/P) is cointegrated with the selected variables like industrial production index (IPI), one-year T-Bill rates (TB12), and real stock prices (RSP). If a cointegration between the variables, i.e., the dependent and independent variables, is found to be the case, it may imply that there exists a long-run co-movement among these variables in the Malaysian money market. From the empirical results it is found that the cointegration between money demand and real stock prices (RSP) is positive, implying that in the long run there is a positive association between real stock prices (RSP) and demand for real narrow money (M1/P). The policy implication that can be extracted from this study is that an increase in stock prices is likely to necessitate an expansionary monetary policy to prevent nominal income or inflation target from undershooting.

scholarly journals Does Export Led Growth Hypothesis Hold Under World Crisis Recovery Regime in Malaysia?

2019 ◽  
Vol 10 (5) ◽  
pp. 9
Author(s):  
Asmawi Hashim ◽  
Norimah Rambeli ◽  
Norasibah Abdul Jalil ◽  
Normala Zulkifli ◽  
Emilda Hashim ◽  
...  
Keyword(s):  
Economic Growth ◽  
International Trade ◽  
Exchange Rate ◽  
Exchange Rates ◽  
Data Series ◽  
World Crisis ◽  
Long Run ◽  
The Impact ◽  
Growth Hypothesis

This paper examines empirically the nature of the impact of the exchange rate on import, export and economic growth in Malaysia from 2009 until 2018. The objective of this study is to investigate the long-term and short-term relationship between endogenous and exogenous variables and also to identify the effects of exchange rates on dependent variables including imports, exports and the Gross Domestic Product (DGP) that represent the productivity of the country. This study further focuses on investigating the impact or the role of export in drive the county economic growth. In achieving these objectives, the Augmented Dickey-Fuller (ADF) testing procedure is used to test the presence of unit root. In order to investigate the incidence of long run relationship between the data series, the Johansen Juselius Cointegration Vector is utilized. The Granger Causality in Vector Error Correction Model (VECM) framework is employed to differentiate between short run and long run causal effects in examining the led growth determinants. The result shows that there is causality between exchange rate, import, export and GDP. Moreover, this study shows that exchange rates responded positively to import and export and negatively to GDP. The result further support for export led growth hypothesis in this study. Thus, confirm for the role of export in motivating the economic growth productivity in after World Crisis regime in year 2008. However, Malaysia must not only relay on international trade to generate income for the country. This is because Malaysia is fortunate to have survived the negative effects of the global crisis; the international trade is exposed to exchange rate instability. If Malaysia wants to succeed in international trade, it may be able to focus on food and services trade. As alternative Malaysia may focuses on agriculture sector by improving the research and development and be a champion on food supply for the world.

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

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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