Exports and Imports-Led Growth: Evidence from a Small Developing Economy

This paper examines equilibrium relationships and dynamic causality between economic growth, exports, and imports in Nepal using time-series data between 1965 and 2020. This research examines the impact of exports and imports on the economic growth of Nepal and documents empirical evidence in exports-led growth, imports-led growth, growth-led exports, and growth-led imports hypotheses in both the short and long run. The test results show no evidence favoring the exports-led growth and growth-led exports hypotheses in both the short and long run. However, the study finds evidence supporting the imports-led growth hypothesis in the short term and the growth-led imports hypothesis in the long term. Overall, this paper finds no evidence in favor of the notion that foreign trade supports the economic growth of Nepal in the long run. The research findings may have important implications for policymakers in Nepal. The paper contributes to trade and economic growth literature by investigating the relationship between exports, imports, capital, and gross domestic products in a small economy such as Nepal, where exports make a minimal and imports make an extensive contribution to gross domestic products by using cointegration and the vector error correction model.

The role of fuel prices in spatial price transmission between horticultural markets: empirical analysis from a developing country

This article aims to analyze how fuel prices impact spatial price transmission between two Chilean horticultural wholesale markets. We implement a regime-dependent VECM where price transmission parameters depend on dynamics imposed by a stationary exogenous variable (fuel price). We identified two price transmission regimes characterized by different equilibrium relationships and short-run adjustment processes. This implies that fuel prices affect price transmission elasticities and intermarket adjustment speeds. Our results show increasing marketing costs as farm to market distance grows. This impact depends on each product’s attributes. Highlights This article analyzes the effect of fuel prices on the price transmission mechanism between the most relevant Chilean horticultural wholesale markets. A regime-dependent Vector Error Correction Model where price transmission parameters depend on fuel price was implemented. Clear evidence of the role played by fuel prices for in horizontal price transmission between the wholesale markets considered in this study was found. This situation supports the idea that regardless of quantities traded in regional markets, the major effect of price adjustment is a result of the high demand, distances and market concentration of a central market. This impact depends on each product’s attributes.

Nexus between FDI, Infrastructure Investment, Tourism Revenues, and Economic Growth: Mega Event Evidence

The object of this study is to examine the response of economic growth in Germany to 2006 FIFA World Cup hosting (represented by the heavily influenced variables of this huge event: Growth of Infrastructure Spending, Tourism Revenues, and Foreign Direct investment) during the period (2000 – 2017). The study employed Dynamic Ordinary Least Square (DOLS) approach to estimate the long-run equilibrium relationships amongst the variables. The results indicate that there is a co-integrating long-run relationship among the studied variables and provide empirical evidence showing that an increase in the growth of infrastructure spending (GINFR) 1 unit leads to an increase in the growth of GDP (GGDP) by 0.374 unit, an increase in the tourism revenues (TR) 1 unit leads to increase in the growth of GDP (GGDP) by 0.155 unit, and an increase in foreign direct investment (FDI) 1 unit leads to an increase in the growth of GDP (GGDP) by 0.055 unit. What distinguishes this paper is that it is one of the rare studies that went beyond the short effect of mega-events on the host country and investigated the long-term economic impact of the most important macro variables associated with mega-events on economic growth. Doi: 10.28991/esj-2021-01323 Full Text: PDF

Public Debt Frontier: A Python Toolkit for Analyzing Public Debt Sustainability

This study proposes a synthetic visual indicator with which to perform debt sustainability analysis using dynamic general equilibrium models. In a single diagram, we summarized the general equilibrium relationships among economic activity, government budget, and the maximum amount of sustainable public debt. Then, we measured sustainability using the distance of actual debt from the model-consistent maximum debt. This indicator can be implemented with any DSGE model; as a backing theory, we used a neoclassical model augmented with endogenous tax revenues, disaggregated public spending, different production technologies for public and private goods, non-atomistic wage setters in public labor (unions), and a fully specified maturity curve for public bonds. We provided an example of its usage using the case of Greece during the last public debt crisis. To perform the numerical analysis, we developed original software, whose advantage is allowing an audience without expertise in DSGE models to perform general equilibrium debt sustainability analyses without requiring an understanding of the technicalities of DSGE models.

Characterizing and Communicating the Balance of Risks of Macroeconomic Forecasts: A Predictive Density Approach for Colombia

Since July 2021, Banco de la República strengthened its forecasting process and communication instruments, by involving predictive densities on the projections of its models, PATACON and 4GM. This paper presents the main theoretical and empirical elements of the predictive density approach for macroeconomic forecasting. This model-based methodology allows to characterize the balance of risks of the economy, and quantify their effects through a joint probability distribution of forecasts. We estimate this distribution based on the simulation of DSGE models, preserving the general equilibrium relationships and their macroeconomic consistency. We also illustrate the technical criteria used to represent the prospective factors of risk through the probability distributions of shocks.

The Impact of International Tourism on Economic Growth and Carbon Dioxide Emission in Asean Five Country

The purpose of this paper is the international tourism have impact on economic growth and carbon dioxide (CO2) emissionsin ASEAN Five (Indonesia, Malaysia, Philippines, Thailand, Singapore) or not. There are increase in tourism receipts, GDP, and FDI as well as CO2 emissions approximately 9%, 5%, 4% and 26% respectively. They are always increasing, but is there any relation between international tourism, GDP and carbon dioxide (CO2). This research employs data from 1995 to 2018 to examine long-run equilibrium relationships between tourism, CO2, economic growth and foreign direct investment (FDI). Panel analysis with unit root and cointegration test approachis utilized. This paper found that there is a long-term equilibrium relationships between each variable.The tourism receipt, FDI and CO2 emissions affect economic growth positively and statistically significant. In addition, economic growth affect CO2 emissions while tourism does not affect CO2 and FDI indicates a negative relationship on CO2 emissions. Finally, the paper reveals that international tourism receipt affect economic growth but does not affect CO2.

Rural-Urban Migration at High Urbanization Levels

This study assesses the empirical relevance of the Harris-Todaro model at high levels of urbanization a feature that characterizes an increasing number of developing countries, which were largely rural when the model was created 50 years ago. Using data from Brazil, the paper compares observed and model-based predictions of the equilibrium urban employment rate of 449 cities and the rural regions that are the historic sources of their migrant populations. Little support is found in the data for the most basic version of the model. However, extensions that incorporate labor informality and housing markets have much better empirical traction. Harris-Todaro equilibrium relationships are relatively stronger among workers with primary but no high school education, and those relationships are more frequently found under certain conditions: when cities are relatively larger; and when associated rural areas are closer to the magnet city and populated to a greater degree by young adults, who are most likely to migrate.