Applied Macroeconomics Research Papers - Academia.edu (original) (raw)

The study provides new evidence on the effect of financial openness on FDI inflows in Nigeria using data that span the period from 1981 to 2016. The FMOLS estimator is employed. The study finds that financial openness is negatively and significantly related to FDI inflows, but its interaction with political regime is positive and significant. This suggests that the effect of liberalization of capital accounts on FDI inflows is regime-dependent: the more democratic the government is, the more FDI the country attracts. It also finds that trade openness, expansion of domestic market, infrastructural development and acceptable levels of inflation enhance the attractiveness of the economy to FDI. In view of the evidence, the need for the government to be more democratic, investment in infrastructural development, greater integration of the economy with the global market, expansion of domestic market size by way of enhancement of per capita income are recommended to enhance inflow of FDI to the country.

- by and +1
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- Development Economics, International Economics, Monetary Economics, Applied Econometrics

In consideration of Nigeria's low access to electricity which has consistently been below 60% for nearly three decades, the study examines the development effect of energy poverty in the country. The S-estimation method of the robust least squares estimator was employed for analysis of annual time series data spanning the period from 1990 to 2017. The study finds that energy poverty adversely affects the nation's economic development, implying that improved access to electricity is development-enhancing. Domestic investment and labour force are also found to be crucial development factors in the country. However, FDI inflows, trade openness and currency depreciation are found to have adversely affected the development of the nation's economy, highlighting the (low) extent of preparedness of the country for the vagaries of globalization. In view of the empirical evidence, to enhance the development of the nation's economy (and the standard of living therein), the study recommends expansion of rural and urban electrification; reduction of electricity tariffs; design and implementations of policies and programmes to encourage domestic investment; labour force development; import controls and export promotion; prevention of excessive depreciation of the domestic currency; and implementation of appropriate FDI policies to mitigate its adverse effects on development.

- by Andrea guido and +1
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- Economics, Development Economics, Econometrics, Macroeconometrics

The issue of youth unemployment rate in the heavily indebted and less developed EU countries is currently on the margins of both media interest and policy debates. This paper compares the influence of several economic variables on the total unemployment rate and the youth unemployment rate. The countries that are studied are three countries with the highest youth unemployment rate: Greece, Croatia and Spain, and three countries with the lowest youth unemployment rate: Germany, Denmark and the Czech Republic. By implementing an Autoregressive Distributed Lags (ARDL) approach, this paper concludes that the youth unemployment rate is significantly more affected by the increase of the public debt-to-GDP ratio in comparison to the total unemployment rate in Croatia and Spain. This paper finds significant differences in the factors that impact youth unemployment rate in comparison to total unemployment rate. Notably, the impact of economic growth is far stronger in decreasing total unemployment rate than youth unemployment rate. The main conclusion of this paper is that there should be a new European economic framework that will focus on combating rising youth unemployment rate in order to avoid potentially dangerous consequences and restore faith in the EU and national institutions which has still not recovered from the 2008 crisis.

- by Filip Kokotović
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- Political Economy, Economic Growth, European Union, Work and Labour

We have analyzed the short term and long term linkages between the sectoral indexes of
Bombay Stock Exchange in India by using the daily data on nine sectoral indexes for the period
23rd August 2004 to 31st June 2010. After confirming the same order of integration of the study
variables from the unit root test incorporating endogenously determined structural breaks,
structural cointegration test has been carried out followed by VECM , Impulse response functions
and variance decomposition analysis. The cointegration analysis results indicate that most of the
sectoral indexes in India are cointegrated with at least one of the other indexes indicating that the
sectoral indexes posses’ useful information about the movements of other indexes. This is
confirmed by the Impulse response function analysis also. The comovements between the
sectoral indices indicate that the Bombay stock exchange is not weak form efficient and the
possibility of sectoral portfolio diversification is limited

- by Soumik Sanfui
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- Macroeconomics, Macro Economics, Applied Macroeconomics, Macroeconomics Dynamics

The purpose of this paper is to empirically verify the validity of Okun's law in Nigeria. Annual time series data spanning the period from 1982 to 2012 are used for the analysis which involves cointegration and error correction modeling. The analysis finds evidence in support of Okun's law as it shows that economic growth (measured as real GDP growth) significantly reduces unemployment rate in the short run. The long run effect of economic growth on unemployment is however found to be statistically insignificant. The analysis also finds evidence in support of the Philips curve, as significant inverse relationship is observed between inflation and unemployment rate in the short run. Furthermore, trade openness is found to have helped reduce unemployment rate significantly in the short run. The paper recommends inter alia, design and implementation of policies that are targeted at accelerating the growth of Nigeria's economy, maintenance of inflation at the levels consistent with growth, greater openness of the economy to international trade, guarded increase in government final consumption expenditure and human capacity development, as measures to tackle the problem of unemployment in the country.

- by Ry Manalo
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- Microeconomics, Macroeconomics, Consumer Behavior, Applied Macroeconomics

All of economics - hypothetico-axiomatic deductive equilibrium economics that is - agrees that lower interest rates stimulate growth and higher rates slow growth. This claim has been made so frequently in the past half century and beyond that one likes to assume that it refers to a well-established empirical fact. However, there is no empirical evidence. This paper presents the first thorough empirical study on this question. The claim is found to be untrue. There are major consequences for economics, research methodology and ecological economics.

Enhancing Financial Innovation and Access (2014) report 40% of Nigeria's adult population is financially excluded. Much of this proportion includes the poor and the financially weak living in the rural areas and the urban fringes. The Micro Finance policy of the Nigerian government was intended to convert existing community banks that meet certain criteria into microfinance banks (MFBs), so as to offer services that appeal to the financially excluded adult Nigerians and bring them into the mainstream financial system. The performance of MFBs between 2007 and 2011 appears to suggest that progress is being made. The assets and liabilities of the MFBs had rose to N190.7 billion from just N55.1 billion in 2006. The loans and advances given by MFBs also increased from a mere N16.0 billion in 2006 to over N67.6 billion at end-December 2011. Moreover, the asset base of MFBs has been projected to 120 billion by the year 2010. MFBs could have done more but for a myriad of challenges that affect their operations such as poor risk management processes, dearth of infrastructure, high cost of operations, among others. It is on this premise that the paper suggest that the government should do more to create an enabling environment that will enable MFBs to thrive and grow; employment of qualified staff who are sufficiently motivated; and regular staff training to expose staff to strategies that are critical to micro financing, etc.

- by Prof. Francis O . Nwankwo and +2
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- Accounting, Cooperatives, Applied Macroeconomics

This paper examines the incidence and consequences
of financialization in the industrialized countries of the
Organization for Economic Cooperation and Development
(OECD). Using the latest panel data from the OECD and the
ILO, the paper first documents the extent of financialization in
OECD countries and then analyzes the relationships between
financialization and three other variables: inequality, growth and
unemployment. There is strong empirical evidence for
considerable financialization across the OECD, with significant
and negative impacts on all three variables.

- by Jacob Assa
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- Finance, Development Economics, Financial Economics, Public Economics

In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies.

ABSTRACT
Organic agricultural products still have a place for consumers, so that the organic rice has not
become a major food community. Heightened consumer awareness of the importance of
health and environmental protection so that the estimated demand for organic rice will
increase, but the available production has not been able to meet the needs of the market.
This study aimed to analyze the factors that influence the consumer's decision to buy organic
and non-organic rice. The study design filed 13 variables suspected to be the cause of
consumers buy organic and non-organic rice, using factor analysis. The questionnaire
addressed to 100 respondents, consisting of 50 respondents buyers of organic rice
and 50 non-organic rice buyer. Sampling was done by convenience sampling. The
results showed that formed three factors that influence the consumer's decision to buy
organic rice, namely 1) the factors of income and expenditure, 2) education and delivery
factors, and 3) the availability factor, vehicle ownership and external motivation. Based on the
factor scores, the highest is the education factor, the availability and delivery. The increasing
awareness of consumers to organic rice, and health is not determined the price, but rather the
availability and sustainability, followed by quality of service (service quality) in the form of
delivery
Keywords: Organic rice, Consumer decisions, Factor analysis, Availibity and
Sustainabality

The globalization of COVID-19 pandemic and its economic impacts is set to run havoc across all economies in the world, throwing many into recession and possibly economic depression. As the numbers of infected and death cases rise sharply and recovery from the pandemic remains uncertain even in developed countries, evidence of shocks across economies including China, the Europe, and the US are already emerging. The aim of this paper is to provide an overall understanding of the likely macroeconomic shocks of the pandemic, covering economic activities or areas including demand, supply, supply chain, trade, investment, price level, exchange rates, and financial stability and risk, economic growth, and international cooperation. The paper first presents a general and theoretical mapping of the likely macroeconomic impacts of the pandemic on an affected economy and then reviews the emerging evidence in relation to the impact mapping to understand the nature of the impacts. The paper then illustrates the likely impacts using a standard macroeconomic AD-AS model and outlines some necessary features that needs to be considered while designing policy responses by governments and international institutions in mitigating the economic shocks. Assessments of this paper are broadly in line with the limited studies available on the economics of COVID-19.

In the past, little or no attention was directed to the informal sector in the development agenda in Sierra Leone. The inability of the formal sector to absorb all the available resources in the country has led to the rapid growth of the neglected informal sector. The aim of this research is to assess and evaluate the role played by the National Cooperative Development Bank as a Non-Bank Financial microfinance Institution in providing financial services to class of economically poor people in the Western Area whom hitherto were been neglected by the formal sector. A sample of 30 “Barrays” with each constituting 5 members totaling to 150 respondents were thoroughly investigated since 2001 to 2005.The Ordinary Least Squares econometrics estimation technique was used to analyse the data employing a Probit Regression model. The result reveals that the probability of access to credit is increased if the individual is a; trader, self employed, widow and with increases in the initial amount deposited which was used as a proxy variable for cash collateral. However, the probability of access to credit is reduced if the individual’s education is primary. The Probability value of the Wald Test(chi^2=0.0991) also indicates that the overall regression is significant at 10%.The research has proven that NCDB is vital and this understanding is important for academics and policy makers in shaping the future performance of the Non-Bank Financial Institutions.

NB : Une version anglaise de ce papier de recherche a été publiée dans la revue internationale indexée "The Asian Academic Research Journal of Social Sciences and Humanities". Pour lire la version anglaise, veuillez suivre le lien ci-après : https://www.researchgate.net/publication/322801863_Fiscal_Deficit s_and_External_Sector_Variables_A_Multivariate_Structural_Modeling_f or_Morocco Résumé : Ce papier se propose de mener une analyse théorique et empirique sur les interactions entre les variables du secteur externe et celles des finances publiques en se référant au cas du Maroc. Le papier se veut novateur au double niveau théorique et empirique en ce sens qu'il examine théoriquement les interrelations en profondeur qu'entretiennent les variables budgétaires et celles du secteur externe tout en essayant de les valider empiriquement à travers des modèles multivariés aussi bien à forme réduite que structurels. L'estimation de modèles multivariés structurels vise essentiellement à analyser les effets des chocs structurels générés par les variables budgétaires et celles du secteur externe. De prime abord, le papier examine les fondements théoriques et les études empiriques concernant les effets des variables budgétaires sur les indicateurs du secteur externe. Il se penche ensuite sur la formulation et la validation empirique d'hypothèses théoriques additionnelles sur les liens entre ce groupe de variables dans le sens opposé en gardant à l'esprit que les relations dans cette direction sont largement sous-explorées dans la littérature théorique existante.

- by Brahim Mansouri and +1
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- Political Economy, Applied Econometrics, Applied Macroeconomics

L'objectif de ce document est d'analyser la place qu’ occupent les modèles DSGE dans la modélisation macroéconomique aujourd’hui par rapport à la modélisation keynésienne et la modélisation VAR , et montrer comment dériver un NKM,... more

- by Zakaria EL Faiz and +1
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- Macroeconomics, Applied Macroeconomics, New keynesian Model

This study applied the Index of Institutional Quality (IQ) methodology to measure the level of independence of the Reserve Bank of Malawi (central bank) and examine its impact on inflation. The IQ methodology assesses independence of central banks based on their actual practices. The methodology is suitable for developing countries whose practices do not fully conform to the laws of Banks that are in place. The study finds that the average independence index of the Reserve Bank of Malawi (RBM) is 15.1, which is more than half below the total index value of 36. This clearly shows that the RBM is not convincingly independent. Although the results show an above-average value for index of monetary policy independence, indications are that the RBM is not free from political pressures as evidenced by below-average values for indices of political and fiscal independence. Using Ordinary Least Square (OLS), the results further show that the low degree of independence by the RBM has contributed to high inflation in Malawi.

The purpose of this project is to determine whether the inflation rate of a specific set of countries and regions can be described by a normal distribution and how their descriptive statistics – such as mean, standard deviation, kurtosis, skewness – behave. A secondary purpose of this project is to determine whether the consumer prices index (CPI) and the gross domestic product (GDP) deflator differ in this regard. Finally this project will test both the CPI and the GDP deflator for autocorrelation of order 1.

This study examined the influence of oil price oscillation and exchange rate dynamics on economic performance. While multiple regression models was adopted to examine the effect of oil price and exchange rate dynamics on economic performance, we employed exponential generalized autoregressive conditional heteroschedasticity (EGARCH) to investigate the effect of oil price oscillation on exchange rate dynamic using annual time series data that covers the period 1970-2013. However, the results of the study suggested that real exchange rate (REXR) exhibits volatility of about 16%. The result also shows that 10% increase in oil price leads to 19% increase in REXR in the long run. Nonetheless, there is no evidence of fluctuation in the foreign exchange rate market, caused by changes in oil prices in Nigeria as at the time of the study since the shock effect between oil price and exchange rate dynamics is relatively not significant in the long run and hence, in explaining the reasons for volatility in exchange rate as represented in EGARCH result. Also, we observed a positive relationship between oil price, exchange rate dynamic and economic performance (proxy; real gross domestic product). From the empirical findings, this study therefore recommends that government should reduce the pressure on exchange rate by diversifying the economy so as to reduce the pressure on oil. This will help to stabilize oil price and promote growth.

- by Charles Manasseh and +1
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- Finance, Financial Economics, Institutional Economics, Applied Econometrics
- by Cami León
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- Macroeconomics, International Macroeconomics, Macro Economics, Applied Macroeconomics

The National Bank of Rwanda and other EAC central banks committed to move
to an interest rate based monetary policy by December 2018. The interest rate
based regime has a lot of forward looking aspects and therefore calls for more
understanding of the economy and scaling up of modeling and forecasting
capacities (Gill Hammond et al., 2012; Roger, Scott, 2010). In this view, the
FPAS macro model, the core model of inflation as well as a set of near term
forecasting and nowcasting tools were developed for the Rwandan economy.
This paper explains the current structure of the core model of inflation and
demonstrates how it is useful for forecasting and simulation analysis. Despite
being called the core model of inflation, the model can be used to derive
forecasts for aggregate demand and its components (section 4.1) and thus serve
as a useful tool to track demand side inflationary sources. Being a macromodel,
it also provides a consistent framework to analyze the impact of
exogenous shocks on the Rwandan economy and thus helps to have structured
discussions. The in-sample forecasts show that the model tracks well the path
of key demand side macroeconomic variables (components of domestic and
external demand) and thus, the in sample forecasts for real aggregate
expenditure are quite close to the actual data.

- by KARANGWA MATHIAS
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- Development Economics, Monetary Policy, Applied Macroeconomics
- by Muhammad Fajar
- •
- Economics, Applied Macroeconomics

Background: The presence of food security in all dimensions is a more prominent achievement toward sustainable development. If we accept this truth that human resources are pillars of evolution, then we must take that hunger and malnutrition are the most significant barriers toward development. Afghanistan as a least developing country has 28% severe and moderate food insecure people of total population. Objective: This study examines the household level determinants of Afghan household food security and hunger. Method: Multinomial Logistic Regression is used to assess the relationship of food security with household wealth and income, education, occupation, food resource and socio-demographic factors. This study is conducted using NRVA Survey data of Afghanistan Central Statistics Organization. Results: Findings have shown the significant positive influence of household wealth, livestock and irrigated land ownership, higher education, crop producing, small business ownership and physical distance to market, on food security level while the impact of household size, household head gender, and occupation with low wages had the significant negative implications. Conclusion: Household-level food security determinants are mechanisms through which Afghans are pushed to chronic nutrition insecurity. Agriculture and Education development and rural-urban linkages would be the optimum solutions to meet SDG 2 on 2030.

We test whether the country risk variable is a significant risk factor in several CAPM based models of expected equity returns in Argentina, Brazil, Mexico, South Africa, Russia, Turkey and Venezuela. We also test the usual assumption that country risk can be added with a coefficient value of one. Only in Brazil and Mexico the risk premium associated with the country risk factor is significant. Adding country risk with a coefficient value of one is not generally valid and moreover, in Brazil and Mexico the risk premium for country risk takes a negative value. This shows that international investors may look for exposure to country risk.

- by Ignacio Warnes
- •
- Development Economics, Asset Pricing, Economic Growth, Inflation Theory

This study examines the long-run and the short-run relationship between the real exchange rate, GDP, FDI, inflation (INF), gross capital formation (GCF), Net official's development assistance (NODA), GNI, and trade balance in Uganda for the period 1994-2018. We used an Augmented Dickey-Fuller (ADF) test for the stationarity test, and we use the Johannsen cointegration approach to prove the existence of cointegration. The ADF tests show that the series was non-stationary in level but became stationary after the first difference. The Johannsen cointegration test indicates the long and short-run relationship between all the explanatory and trade balance in Uganda. Under such circumstances, a Vector Error Correction Model (VECM) is employed since the results offer more information than other data generation processes. Our findings are as follows: Real exchange rates, FDI, GCF and GNI have a positive relationship with Trade balance. It means that Uganda can depreciate the Exchange rate to improve its Trade balance. The results proved the J-Curve effect's existence (i.e., the long-term impact of exchange rate on trade balance). The recommendations from this study are-Uganda's monetary policy management should emphasize more efforts on the stability and minimization of the volatility of exchange rates of the shillings since its movements affect international prices both negatively and positively, leading to either a decline or trade boost.

- by Orach Henry
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- African Studies, Applied Econometrics, Regional Economics, Applied Macroeconomics
- by Samih Azar
- •
- Applied Macroeconomics

Most empirical macroeconomic research limited to the period since World War II. This paper analyses the effects of changes in income distribution and in private wealth on consumption and investment covering a period from as early as 1855 until 2010 for the UK, France, Germany and USA, based on the dataset of Piketty and Zucman (2014). We contribute to the post-Keynesian debate on the nature of demand regimes, mainstream analyses of wealth effects and the financialisation debate. We find that overall domestic demand has been wage-led in the USA, UK and Germany. Total investment responds positively to higher wage shares, which is driven by residential investment. For corporate investment alone, we find a negative relation. Wealth effects are found to be positive and significant for consumption in the USA and UK, but weaker in France and Germany. Investment is negatively affected by private wealth in the USA and the UK, but positively in France and Germany.

- by Joel Rabinovich
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- Demand Analysis, Financialization, Applied Macroeconomics, Wealth

The paper examines the effect of remittances and financial development on the real exchange rate in eight selected countries from Sub-Saharan Africa during the period from 1980-2018. The results from the Autoregressive Distributed Lag model, estimated using a pooled mean group estimator, reveal that remittances generate a depreciation effect. This confirms the existence of a reverse Dutch disease effect where remittances support export competitiveness via the real exchange rate mechanism in the long-run. In identifying the channels through which remittances affect real exchange rates, we find that financial integration, financial development as well as trade liberalization are key in mediating the observed remittance-real exchange rate linkage. These findings are in line with the literature on the effect of floating exchange ratesa key ingredient of liberalization in dampening real exchange rate appreciation that is induced by capital flows. The findings are vital and relevant for policy makers and scholars interested in dynamic capital flow movements as well as exchange rate dynamics and overall management of small open economies.

- by John Bosco Nnyanzi and +1
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- Development Economics, Applied Microeconomics, Regional Integration, Risk sharing

Financial Development anD economic Growth in niGeria: asymmetric cointeGration anD thresholD analysis raymonD osi alenoGhena, oluFemi muibi saibu, babatunDe wasiu aDeoye ABSTRACT This study examines the nonlinear relationship between financial development and economic growth in Nigeria, covering the period from 1980 to 2018, in an effort to explain the direction of linearities and determine the exact threshold policy points for financial development variables. The financial development proxies adopted in the study are broad money and credit to the private sector. While deploying the nonlinear autoregressive distributed lag (NARDL) approach to ascertain the asymmetric cointegration status of financial development and GDP growth, the turning point between the variables of study is estimated using the threshold regression approach. The findings from the NARDL analysis show that the relationship between the financial development variables and economic growth are coin-tegrated in the long run and have a U-shaped asymmetrical relationship. Furthermore, the discrete threshold regression analysis reveals that while the switching point for broad money is 17.73% of GDP, it is 6.03% of GDP for credit to the private sector. Therefore, whenever the level of the financial development indicators falls below the estimated tipping point, there is a drag on the country's economic growth. The study recommends the implementation of the financial development threshold points as the minimum levels by which to achieve positive effects on the country's economic growth. A further recommendation to achieve rapid progress in financial development entails the rapid monetisation of financial transactions and the expansion of financial access as well as the strengthening of efficiency and regulation of the financial markets.

This chapter aims to analyze the effects of the great recession of 2008 on a group of developing countries, such as Argentina and Brazil, in the context of a new pattern of growth adopted in 2000. As a general framework of analysis, we will summarize the main features of the new pattern of international growth, beginning with the emergence of China. In this context, we will discuss the main strategies undertaken by developing countries. Of these three strategies, this analysis will focus on one of them. Following Medeiros (2010), we will refer provisionally to this strategy as "neo-Keynesian", which in Latin America is represented by the cases of Brazil and Argentina. In this analytical framework, the term "neo-Keynesian" means a strategy that results in increased economic growth by an expanding domestic market, reducing poverty and increasing real wages. But at the same time, these improvements are achieved without substantive policies aimed at changing patterns of trade specialization as well as inducing a structural change.
Thus, the aim of this chapter is to present and discuss the main features of the new “engine” of global growth in 2000. At this point we follow closely the early vision of Lewis (1980), particularly with regard to China's rise as a major trading power. It will also be described how several developing countries have redefined their strategies for growth in this new context (section 1). Then the emergence of a new pattern of growth will be analyzed, which we have called "neo-Keynesian", and outlineits main features and the results produced within the framework of the specific cases of Argentina and Brazil between early new millennium until the crisis of 2008 (section 2).
Having established the main features of the new pattern of growth, we will analyze the specific mechanisms of transmission of the great recession of 2008 on these growth experiences (section 3). We will show that the crisis did not change the main structural features that characterize the new world "engine of growth" for less industrialized countries. The next step (section 4) will analyze the novel factors of these cycles of growth which allowed them to tackle the crisis with more and better instruments, reducing its internal impact, and which finally allowed them to recover a path of growth quickly. Some important differences between the cases under review will also be highlighted, and we will describe some important features of economic interaction between Argentina and Brazil. At this point some policy implications and some potential dilemmas for the future growth of these countries will be discussed briefly. Finally, section 5 will consist of some brief concluding remarks.

- by Alejandro Fiorito and +1
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- Applied Macroeconomics, Development Macroeconomics, Post-Keynesian Economics

The paper employs the ARDL (bounds test) approach to cointegration and error correction analysis to investigate the long run and short run effects of health expenditure on economic growth in Nigeria in the period from 1995 to 2013, while controlling for the effects of domestic investment, net foreign direct investment and exchange rate. The empirical evidence validates the Mushkin’s health-led growth hypothesis as total expenditure on health is observed to have had positive and significant long-run and short-run effects on the real GDP. Further evidence from the analysis is that gross capital formation (proxy for
domestic investment) also impacts positively on real GDP in the long- and short-run. The effect of net FDI on real GDP is observed to be negative in the short-run, but statistically not significant in the long run. The short-run effect of currency depreciation on the real GDP is negative and significant, while the long-run effect is positive and significant. The paper recommends, inter alia, increased budgetary allocation to the health sector to enhance its contribution to the growth of Nigeria’s economy.

Poverty is both a social and economic phenomenon that has ravaged many countries around the globe. The impact of poverty cannot be underrated and its ugly face manifests in people's poor living standards, poor health, higher child mortality rates and high levels of illiteracy among others. In order to fight the woes of poverty, governments employ different policies including population control, positive economic growth and investment is social and economic sectors. Thus, this study sought to establish the significant impact of economic growth, external debt and population growth on poverty levels. Using time series data from 1980-2016, and employing the Auto Regression Distributed Lag (ARDL) model, the study found that there exist a significant long run relationship and that while individually economic growth was found to be insignificant, external debt and population growth were found to be negatively significant. In the short run however, only external debt significantly influences poverty. The study concluded that the insignificant impact of economic growth on poverty could be as a result of an influx of foreigners who after earning their profits and paying meagre wages to domestic employees externalise their profits leaving only working capital. On external debt, the study concluded that the significant negative impact of external debt on poverty is because the increase in external debt leverages domestic private borrowing and crowds-in private investment. And on population growth, the study concluded that growth in the population provides the economy with an increased supply of human capital and the expansion of markets for goods and services. The study recommended that a policy on external debt ceiling be put in place and that the government should ensure that the projects in which the contracted debt is injected produce results and pay back so that a certain level of debt is maintained and lastly that the government should also devise a system of quotas for the profits that foreign national and multinational companies externalise to their countries

The main objective of this study is to investigate the impact of foreign exchange rate volatility on money demand in Pakistan. For this purpose disaggregate expenditure approach use to construct money demand function. For empirical estimation Autoregressive Distributed Lag (ARDL) approach is employed to investigate the co-integration among the money demand, exchange rate volatility, investment expenditure, consumption expenditure, government expenditure and inflation. The long run results show that household’s consumption expenditures, investment expenditure and inflation has positive and significant relationship with money demand in case of Pakistan. On the other hand, the long run results relating to government expenditures and exchange rate volatility show negative and significant impact on money demand.

- by Muhammad Q A S I M Attari and +1
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- Economics, Econometrics, Macroeconomics, International Macroeconomics

The purpose of this study is to test the validity of Robinson's growth argument that supports economic growth affecting finance using a series of annual data from Malaysia. The key to this debate is whether there is a growth response led by finance or financial response led by the growth between the two variables. As a result, it can provide different fundamental implications. Therefore, it is very important to determine the reasons for these financial growth relationships for every economy. The previous survey in research in the Malaysian case produces mixed results. Therefore, this study is expected to update existing evidence using the latest data and provide further insights on the relationship between finance and growth in Malaysia. This study uses domestic credit as a proxy for financial development as opposed to real per capita GDP (a proxy for economic growth).

- by sham noor
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- Business, Finance, Microeconomics, Macroeconomics

The objectives of this research paper is to measure the impact of inflation and taxation on economic growth of Pakistan by using the time series data from 1991 to 2017. The data was collected from World Development Indicators, IMF, Asian Development Bank, Pakistan Economic Survey and State Bank of Pakistan database. Economic growth GDP was dependent variables while independent variables include: inflation rate, tax revenue, unemployment Rate, tax on international trade and gross capital formation. ADF test, Auto Regressive Distributed Lag (ARDL), Bound Test and ECM were applied to determined stationarity, long run and short run relationship between variables. The findings reveal that gross fixed capital formation and tax revenue are positively related to GDP growth while unemployment, tax on goods and services, inflation and taxes on international trade have negative impact on GDP growth. We suggest to control tax evasion and expand tax net.

- by Prof.Dr.Abdul Ghafoor Awan
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- Applied Macroeconomics

In the Basel III era, measuring, managing, mitigating and forecasting interest rate risk has become significant. In the first study of its kind, this paper develops a principal component analysis-based forecasting of interest rates of different maturities and stress testing approach in a univariate auto-regressive integrated moving average (ARIMA) framework in the context of India. Debating the existence of multiple representations of interest rates in the Indian market, the study broke down all the short-term, as well as long-term interest rates to derive the optimal principal component of unique interest rates. These unique interest rates are further exercised to forecast the future interest rates through the ARIMA model. The rolling average method was applied to the recently created Indian volatility index (VIX) to place the stress points. The model performance was examined over this stress point of building multiple scenario analysis. The study found that ARIMA (2-1-1) forecasting model of interest rates produced a better forecast result, both in the case of in-sample and out-of-sample performances as well as in stress periods. From the forecasting results, the study found that the proportionate gain in yield is higher as the maturity increases. By examining the stress period on the basis of eight quarters (2007: Q4 of 2009: Q3) rolling average on Indian volatility Indices, the survey concluded that the Indian economy will reach a stable situation signalled by less volatile interest rates post the second quarter of 2018.