Exchange Rate Dynamics, Energy Consumption, and Sustainable Environment in Pakistan: New Evidence From Nonlinear ARDL Cointegration

Pakistan's local currency has been devalued during different exchange regimes, which may substantially affect energy consumption and CO2 emissions. Therefore, this study investigates the effects of exchange rate depreciation on Pakistan's CO2 emissions and energy consumption from 1990–2018. We apply the nonlinear autoregressive distributed lag (ARDL) cointegration approach for the empirical analysis and found that exchange rate depreciation increases CO2 emissions and energy consumption in both the short and long runs. These results suggest that currency devaluation has an expansionary effect which enhances economic growth at the cost of high energy consumption and CO2 emissions. Therefore, the government needs regulations along with an exchange rate policy to control CO2 emissions. Moreover, the government should search for alternate energy resources such as renewable energy resources that meet the country's energy needs and mitigate CO2 emissions.

The Macroeconomics of Stratification

Stratification economics, which has emerged as a new subfield of research on inequality, is distinguished by a system-level analysis. It explores the role of power in influencing the processes and institutions that produce hierarchical economic and social orderings based on ascriptive characteristics. Macroeconomic factors play a role in buttressing stratification, especially by race and gender. Among the macroeconomic policy levers that produce and perpetuate intergroup inequality are monetary policy, fiscal expenditures, exchange rate policy, industrial policy, and trade, investment, and financial policies. These policies interact with a stratification “infrastructure,” comprised of racial and gender ideologies, norms, and stereotypes that are internalized at the individual level and act as a “stealth” factor in reproducing hierarchies. In stratified societies, racial and gender norms and stereotypes act to justify various forms of exclusion from prized economic assets such as good jobs. For example, gendered and racial stereotypes contribute to job segregation, with subordinated groups largely sequestered in the secondary labor market where wages are low and jobs are insecure. The net effect is that subordinated groups serve as shock absorbers that insulate members of the dominant group from the impact of negative macroeconomic phenomena such as unemployment and economic volatility. Further, racial and gender inequality have economy-wide effects, and play a role in determining the rate of economic growth and overall performance of an economy. The impact of intergroup inequality on macro-level outcomes depends on a country’s economic structure. While under some conditions, intergroup inequality acts as a stimulus to economic growth, under other conditions, it undermines societal well-being. Countries are not locked into a path whereby inequality has a positive or negative effect on growth. Rather, through their policy decisions, countries can choose the low road (stratification) or the high road (intergroup inequality). Thus, even if intergroup inequality has been a stimulus to growth in the past, it is possible to choose an equity-led growth path.

The Effects of Market and Macroeconomic Uncertainties on Corporate Investment Decisions in Nigeria

In this paper, the effect of market and macroeconomic uncertainties on corporate investment decisions was examined using the real option investment theory. Two types of uncertainties were investigated: macroeconomic uncertainties (exchange, interest and inflation rates) and market uncertainty (stock market volatility) while corporate investments were measured as the sum of the changes in capital stock and depreciation. Data were obtained for the period 2005-2019 and the Generalized Autoregressive Conditional Heteroskedasticity (GARCH) estimation technique was employed. The results showed a significant difference between the effects of macroeconomic and market uncertainties on corporate investment decisions. We found that macroeconomic uncertainty of inflation rate has positive relationship with corporate investments, with a coefficient of 0.35071, and interest rate uncertainty (0.15567) and exchange rate uncertainty (-0.07852) were also statistically significant, whereas the linear market uncertainty has a negative value of -0.00173 and the quadratic market uncertainty (0.00520) was statistically insignificant. Therefore, interest rate volatility and inflation expectations are not factors constraining investment growth; however, exchange rate uncertainty exerts a substantial negative influence on corporate investment in Nigeria. Given the findings, the study recommends, among others, an appropriate and stable exchange rate policy that makes for easy business planning and forecasting by rational investors. To achieve a stable exchange rate that would bring about increased investment, the government should implement efficient macroeconomic policies, such as those that minimize the structural rigidities in the economy.

Bank of Mexico governor nomination sparks uncertainty

Significance AMLO initially nominated Arturo Herrera for the role in June, replacing him as finance minister with Rogelio Ramirez de la O. Incumbent Governor Alejandro Diaz de Leon will stand down at the end of December. Impacts A tighter monetary policy will open a significant gap with US interest rates, helping to stabilise the peso against the US dollar. Given Rodriguez’s provenance, the harmonious relationship between Banxico and the finance ministry will probably continue. The nomination of an unexpected individual to lead the central bank will reaffirm AMLO’s authority on economic matters. Although the finance ministry controls exchange rate policy, the government is not likely to modify the free-floating exchange rate regime.

China’s Escape from the Peripheral Condition: A Success Story?

This article explores the strategy of active interventions through which Chinese policymakers have created the conditions for pulling their country out of its peripheral status within the world economy. We find that the strategic use of exchange rate policy and the maintenance of extensive ownership in industrial assets by the national government have played a key role in cumulatively promoting the upgrading of technological capabilities of the national workforce since the mid-1990 onward. Economic data show support for the hypotheses of an increasing capacity of Chinese producers to gain access to oligopolistic technology markets. To the extent that this offers the opportunity to capture a slice of the technological rent hitherto reserved to the capitalist center, our study suggests that the growth of real wages in China will be consistent with the maintenance of the country’s external balance in the long run. JEL classification: L16, O47, J21, F13, B51

CRUDE OIL PRICE, STOCK PRICE AND SOME SELECTED MACROECONOMIC INDICATORS: AN IMPLICATION ON THE GROWTH OF NIGERIAN ECONOMY

Since the first oil price oscillation in 1973s, macroeconomists have viewed sharp measures in the price of oil are generally as an important source of economic vacillations. The go-slow of economic activities has important implications for economic agents and markets. Therefore, this paper models and forecasts the crude oil price, stock price and selected macroeconomic variables in Nigeria. A model predicated on the Keynesian model using yearly data between 1986 and 2016 and analysed using VECM and GARCH approaches. The findings showed that there is long run relationship through Vector Error Correction Model which was achieved well in forecasting the selected macroeconomic variables while the volatility in crude oil price and stock price causes by external and internal forces also captured by General Autoregressive Conditional Heteroskadasticity. The long run negative effect of macroeconomic variable on economy growth can be controlled by making strong fiscal and monetary policies. The 2016 recession was reinforced by all share index and exchange rate as the path of growth declined over the forecast horizon. Further checks carried out using normality test validated the choice of this work. The paper concludes that monetary and exchange rate policy consistency are decisive for smoothening business rotation vacillations and promoting market stability. JEL: L10; E30 <p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/edu_01/0851/a.php" alt="Hit counter" /></p>

Determinants and Sustainability of Manufacturing Sector Performance in Nigeria: The Roles of Selected Macroeconomic Variables

Manufacturing sector is a vibrant sector that spurs growth in every other sector of the economy. Despite this, macroeconomic environment in the country has not made this desire materialized. Therefore, the study examined the determinants and sustainability of manufacturing sector performance in Nigeria from 1994-2019. The data used include manufacturing sector output, interest rate, real exchange rate, tax rate, money supply and trade openness. Also, Error Correction Model (ECM) and Pairwise Granger Causality(PGC) techniques were used for the formulated objective. The unit root test confirmed stationarity of interest rate at level; while other were integrated of order one (D = 1). The Johansen co-integration established a long-run relationships. The ECM corrected the disequilibrium at an annual rate of 77.5%. Also, real exchange rate, tax rate and trade openness had a direct and significant effect on manufacturing sector output. While, interest rate and money supply were non-significance. The PGC result revealed a bi-directional causality between real exchange rate and manufacturing sector and tax rate and manufacturing sector output. It was concluded that increase in consumption tax, real exchange rate and liberation of the economy were the determinants of manufacturing sector performance, while appreciation of nigeria’s currency (naira) and increase in tax rate with proportional improvement in infrastructural facilities are needed to sustain it. Therefore, recommended that the financial institutions especially the apex bank should eliminate different bench-mark of exchange rate policy by allowing the market force of demand and supply to depict the real value of naira.