scholarly journals Macroeconomic Determinants of External Debt Accumulation in Ethiopia: An ARDL Bound Testing Approach

2021 ◽  
Vol 4 (2) ◽  
pp. 1-28
Author(s):  
Eyayu Tesfaye Mulugeta
Keyword(s):  
External Debt ◽  
Infrastructure Development ◽  
Continuous Increase ◽  
Debt Accumulation ◽  
Long Run ◽  
Short Run ◽  
Testing Approach ◽  
The Government ◽  
Macroeconomic Determinants ◽  
External Borrowing

This study attempts to explore the major macroeconomic determinants of external debt stock growth in Ethiopia prompted by a continuous increase in government external borrowing over the period 1981-2018. For this purpose, the study employed the ARDL bound testing approach and all the necessary time series diagnostic tests were conducted. The long run model estimation result revealed that per capita GDP growth has a positive and significant effect on the country’s external debt stock. The result also revealed that the budget deficit and political instability put a significant upward pressure on the external debt stock growth of the country both in the short run and long run. Consistent with some existing empirical evidence, the study revealed negative and significant influence of openness and infrastructure development on the external debt stock growth. Consequently, the government should embark on prudent borrowing to achieve structural transformation.

scholarly journals Macroeconomic determinants of external debt in Nepal: The ARDL Approach

2020 ◽  
Vol 2 (2) ◽  
pp. 275-289
Author(s):  
Tilak Singh Mahara ◽  
Sabina Dhakal
Keyword(s):  
Foreign Aid ◽  
Budget Deficit ◽  
Trade Openness ◽  
External Debt ◽  
Debt Burden ◽  
Debt Accumulation ◽  
Long Run ◽  
Short Run ◽  
Macroeconomic Determinants

Background: External debt is the loan amount borrowed from the international level, payable with interest and principal. It is the major source of financing budget deficit in a developing country. Debt accumulation for productive investment is a viable strategy for long-term development. To escape the external debt burden or for the external debt burden strategy, it is crucial to study the major macroeconomic determinants of external debt. Objective: The principal objective of this study is to examine the major macroeconomic determinants of external debt in Nepal. Methods: In this study, the external loan is taken as a dependent variable whereas, budget deficit, per capita gross domestic product, terms of trade, trade openness, foreign aid, and real effective exchange rates are taken as explanatory variables that may cause external borrowing in Nepal. The study applies the ARDL cointegration approach to trace out the relationship between the stated variables. The bound test (F-Version) has been applied for the determination of the existence of long-term cointegration among variables.Short-run dynamics is measured by the Error Correction Mechanism. Results: The empirical result indicates that fiscal deficit, trade openness, and foreign aid are major macroeconomic determinants of external debt in Nepal. From the obtained results, it is seen that an increase in foreign aid helps to significantly reduce external debt but trade openness and the budget deficit significantly leads to an increase in external debt both in the short-run as well as in the long-run. The error correction term is found to be significant and negative, showing proof of a strong association between the selected variable and ensures the correction of short-term disequilibrium to a stable equilibrium at the rate of 37 percent per annum. Conclusions: The study concludes that foreign aid, budget deficit, and trade openness are the main determinants of external debt in Nepal in both the long-run and short-run.  Appropriate export-import or foreign trade policy, effective demand management policy, progressive tax system as well as monitoring tax evasion, effectual and productive utilization of available resources helps to reduce debt accumulation and saves the nation from the possible debt trap.

scholarly journals EXTERNAL DEBT AND EXPORT PERFORMANCE IN PAKISTAN: AN EMPIRICAL INVESTIGATION

2017 ◽  
Vol 13 (2) ◽  
Author(s):  
Muhammad Asif Shamim ◽  
Keyword(s):  
Export Performance ◽  
External Debt ◽  
Negative Relationship ◽  
Trade Agreement ◽  
Energy Prices ◽  
Negative Effects ◽  
Causality Test ◽  
Long Run ◽  
Short Run ◽  
The Government

The objective of this research is to study the relationships between the two variables, external debt and exports performance within the reach of Pakistan. The data used for the study was selected by annual time series from 1972 to 2014. According to the co-integration analysis done for the study there was a significant negative relationship between export performance and external debt in Pakistan. Whereas when the Error correction model was used, the results pointed out an inconsequential relationship in the short run within the two variables, external debt and exports in the short run. The next test of stability analysis confirms that long run model is stable whereas, the granger causality test claims a unidirectional relationship from external debt and exports; the result of impulse response also confirms the negative relationship between exports and external debt in Pakistan; further the result of FMOLS states that the initial results are vigorous; the major reasons for the negative link between the two variables exports and external debt is the IMF conditionality to Pakistan that it has to raise revenue by increasing indirect taxes and increasing energy prices. It is suggested that dependency on external debt should be discouraged and this gap of foreign inflow should be covered with foreign direct investment and inflows of workers‘ remittances and by increasing export earnings in the country. Government should improve the regional trade agreement and should avail the opportunity of GSP plus (Generalized Scheme of Preferences) status by improving the law and order situation. It is also suggested that the government should control the failure of power supply and export allowances should be given to the Export Processing Zones. These are the earliest measure that should be taken to minimize the negative effects of external debt on export performance in the country.

scholarly journals Determinants of the Size of the Government Expenditure: An Empirical Study on Bangladesh

2018 ◽  
Vol 10 (11) ◽  
pp. 149
Author(s):  
Mahamuda Firoj ◽  
Nair Sultana ◽  
Farhana Sultana
Keyword(s):  
Foreign Aid ◽  
Dynamic Equation ◽  
Government Expenditure ◽  
External Debt ◽  
Least Square ◽  
Size Of Government ◽  
Long Run ◽  
Short Run ◽  
Static Equation ◽  
The Government

Analysis of the nature of government expenditure constitutes a central concern in economic literature. This is because many countries of the world consistently have increased the size of government expenditure. Bangladesh has done the same practice over the last few decades. There is a need to investigate the factors which determine the size of the public spending of Bangladesh. The error correction modeling technique for the short-run dynamic equation and ordinary least square (OLS) for long-run static equation are used over the period 1973 to 2016 to this purpose.  The results of the short run dynamic equation and long-run static equation showed that external debt, real GDP, urbanization, tax, and non-tax government revenue positively influence the government expenditure where dependency on foreign aid and trade openness adversely affect it. The study recommends that the government should take proper step to expand the revenue base, stimulate the economic growth and reduce the external debt, and foreign aid.

scholarly journals Is External Debt Hampering Growth in the ECOWAS Region?

2020 ◽  
Vol 12 (4) ◽  
pp. 54
Author(s):  
Felix Fofana N’Zue
Keyword(s):  
Economic Performance ◽  
Positive Impact ◽  
External Debt ◽  
Debt Accumulation ◽  
Knowing That ◽  
Long Run ◽  
Rate Of Increase ◽  
Short Run ◽  
Regional Economic Performance ◽  
The Impact

The paper aims to determine the impact of external debt on economic growth in the ECOWAS region. Panel data spanning from 1990 to 2016 is used and analyzed using panel CS-ARDL estimation approach. The results indicate cointegration among the variables. The paper found that external debt has a positive impact on economic performance up to a threshold. In the short run, the threshold stood at 45% and in the long run, it stood at 42.52%. Beyond these points, additional external debt accumulation negatively affects the regional economic performance. Knowing that the level of the region’s external debt-to-GDP ratio stood at 33.11% in 2018 (below the threshold), it appears that external debt has not yet hampered economic performance in the ECOWAS region. However, there is a need for caution given the fast rate of increase (25% in six years) of external debt accumulation in the region.

scholarly journals Effect of International Remittances on Inflation in Ghana Using the Bounds Testing Approach

2016 ◽  
Vol 6 (1) ◽  
pp. 192 ◽  
Author(s):  
Abdallah Abdul-Mumuni ◽  
Christopher Quaidoo
Keyword(s):  
Public Infrastructure ◽  
Bounds Testing ◽  
International Remittances ◽  
Long Run ◽  
Short Run ◽  
Bounds Testing Approach ◽  
Testing Approach ◽  
The Government ◽  
Transfer Fees ◽  
The Impact

<p class="ber"><span lang="EN-GB">This paper empirically examines the effect of international remittances on inflation in Ghana from 1979 to 2013 by incorporating international remittances as an exogenous variable to the standard inflation function. Applying the bounds testing approach, the empirical results indicate that international remittances have a significant effect on inflation in the long-run. However, in the short-run, no significant relationship is evident between these two variables. The study recommends that in order to reduce the effect of international remittances on inflation rate and increase the impact on growth, the government should improve public infrastructure. By this, excessive transfer fees would reduce and these remittances could be channeled into more productive sectors rather than being used mainly for consumption purposes.</span></p>

Migration and US agricultural competitiveness

2013 ◽  
Vol 10 (2) ◽  
pp. 159-179 ◽  
Author(s):  
Philip L. Martin
Keyword(s):  
Farm Workers ◽  
Easy Access ◽  
Foreign Born ◽  
Guest Workers ◽  
Long Run ◽  
Short Run ◽  
Lower Wage ◽  
The Government ◽  
The One

Agriculture has one of the highest shares of foreign-born and unauthorized workers among US industries; over three-fourths of hired farm workers were born abroad, usually in Mexico, and over half of all farm workers are unauthorized. Farm employers are among the few to openly acknowledge their dependence on migrant and unauthorized workers, and they oppose efforts to reduce unauthorized migration unless the government legalizes currently illegal farm workers or provides easy access to legal guest workers. The effects of migrants on agricultural competitiveness are mixed. On the one hand, wages held down by migrants keep labour-intensive commodities competitive in the short run, but the fact that most labour-intensive commodities are shipped long distances means that long-run US competitiveness may be eroded as US farmers have fewer incentives to develop labour-saving and productivity-improving methods of farming and production in lower-wage countries expands.

scholarly journals Determinants of Insurance Penetration in West African Countries: A Panel Auto Regressive Distributed Lag Approach

2021 ◽  
Vol 14 (8) ◽  
pp. 350
Author(s):  
Odunayo Olarewaju ◽  
Thabiso Msomi
Keyword(s):  
Banking Sector ◽  
West African ◽  
Education Sector ◽  
African Countries ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
Auto Regressive ◽  
Insurance Penetration ◽  
The Government

This study analyses the long- and short-term dynamics of the determinants of insurance penetration for the period 1999Q1 to 2019Q4 in 15 West African countries. The panel auto regressive distributed lag model was used on the quarterly data gathered. A cointegrating and short-run momentous connection was discovered between insurance penetration along with the independent variables, which were education, productivity, dependency, inflation and income. The error correction term’s significance and negative sign demonstrate that all variables are heading towards long-run equilibrium at a moderate speed of 56.4%. This further affirms that education, productivity, dependency, inflation and income determine insurance penetration in West Africa in the long run. In addition, the short-run causality revealed that all the pairs of regressors could jointly cause insurance penetration. The findings of this study recommend that the economy-wide policies by the government and the regulators of insurance markets in these economies should be informed by these significant factors. The restructuring of the education sector to ensure finance-related modules cut across every faculty in the higher education sector is also recommended. Furthermore, Bancassurance is also recommended to boost the easy penetration of the insurance sector using the relationship with the banking sector as a pathway.

scholarly journals Do Erratic Rainfalls Hamper Grain Production? Analysis of Supply Response of Rice to Price and Non-Price Factors

Agronomy ◽  
2021 ◽  
Vol 11 (8) ◽  
pp. 1463
Author(s):  
Ghulam Mustafa ◽  
Azhar Abbas ◽  
Bader Alhafi Alotaibi ◽  
Fahd O. Aldosri
Keyword(s):  
Unit Root Test ◽  
Rice Production ◽  
Vector Error Correction ◽  
Supply Response ◽  
Target Time ◽  
Vector Error ◽  
Long Run ◽  
Short Run ◽  
The Government ◽  
The Impact

Increasing rice production has become one of the ultimate goals for South Asian countries. The yield and area under rice production are also facing threats due to the consequences of climate change such as erratic rainfall and seasonal variation. Thus, the main aim of this work was to find out the supply response of rice in Malaysia in relation to both price and non-price factors. To achieve this target, time series analysis was conducted on data from 1970 to 2014 using cointegration, unit root test, and the vector error correction model. The results showed that the planted area and rainfall have a significant effect on rice production; however, the magnitude of the impact of rainfall is less conspicuous for off-season (season 2) rice as compared to main-season rice (season 1). The speed of adjustment from short-run to long-run for season-1 rice production is almost two-and-a-half years (five production seasons), while for season-2 production, it is only about one-and-a-half year (three production seasons). Consequently, the study findings imply the supply of water to be enhanced through better water infrastructure for both seasons. Moreover, the area under season 2 is continuously declining to the point where the government has to make sure that farmers are able to cultivate the same area for rice production by providing uninterrupted supply of critical inputs, particularly water, seed and fertilizers.

Determinants of Budget Deficit in Nigeria

2021 ◽  
Vol 6 (1) ◽  
pp. 1
Author(s):  
Maimuna M Shehu ◽  
Ibrahim M Adamu
Keyword(s):  
Budget Deficit ◽  
Budget Deficits ◽  
Cointegrating Vector ◽  
Long Run ◽  
Johansen Cointegration ◽  
Short Run ◽  
Johansen Cointegration Test ◽  
The Government ◽  
One Year ◽  
High Level

This paper investigates the factors governing the determination of budget deficit in Nigeria from 1981q1 through 2016q4. Our methodology is based on Johansen cointegration and Vector Error Correction model (VECM) approach. The result from the Johansen cointegration test suggests one cointegrating vector, which indicates the existence of a long run cointegrating relationship. Evidence from the long run and short run parameters suggest that exchange rate, interest rate and one year lag of budget deficit are the major determinants of budget deficit. Therefore, to achieve a realistic fiscal surplus, the government should determine a high level of accountability in its fiscal operations. In addition, any fiscal surplus should be channeled into productive investments to diversify the economy and reduce the likelihood of potential budget deficits.

THE IMPACT OF RESEARCH AND DEVELOPMENT INVESTMENT ON AGRICULTURAL SECTOR PERFOMANCE IN KENYA

2017 ◽  
Vol 2 (1) ◽  
pp. 34-57
Author(s):  
John Githii Kimani ◽  
Dr. George Ruigu Ruigu
Keyword(s):  
Research And Development ◽  
Agricultural Sector ◽  
Research Policy ◽  
Trade Openness ◽  
Policy And Practice ◽  
Long Run ◽  
Short Run ◽  
The Government ◽  
Parsimonious Model ◽  
The Impact

Purpose: The purpose of the study was to assess the impact of research and development investment/expenditure on the agricultural sector performance in Kenya.Methodology: The study took the peoples impact assessment direction. The data for this study was collected from various government agencies such as KARI, ASTI, Kenya Agricultural Sector Data compendium website, FAOSTAT, World Bank among others. Co-integration and error correction modeling methods were used in analyzing the data for this study.Results: Co-integration results for both the parsimonious and non-parsimonious model indicated that that there is a long-run relationship among the variables in the agriculture performance in Kenya. Further, findings in this study indicated that the variables under study were insignificant determinants of the long run Total Factor Productivity of the agricultural sector.  Meanwhile, Trade openness was the only significant determinant of the short run agricultural Total Factor Productivity.Unique Contribution to Policy and Practice: This study recommends the institutionalization of policies aimed at ensuring interaction between the various stakeholders in the agricultural sectors. This interaction will ensure that resources are better allocated to reduce duplication of research and dissemination activities. In addition, greater collaboration among the stakeholders will promote and strengthen the connection between research, policy and the application of research findings. The study further advocates that the government should follow a trade liberazation oriented approach to the agricultural sector as opposed to a trade tightening approach.

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