• The Journal of Asian Finance, Economics and Business
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• v.7 no.9
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• pp.191-200
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• 2020

This research paper examines the causal relationship between India's economic growth and sectoral contribution to Gross Domestic Product (GDP) and vice versa, in the short-run and long-run, over a 10 years time period. Johansen's method of cointegration is used to study the cointegration between the sectoral contributions to Indian GDP vis-à-vis India's economic growth. Further, the route of interconnection between economic growth and sectoral contribution is tested by using Vector Auto Regression (VAR) model. Special attention was given for investigating impulse responses of economic growth depending on the innovations in sectoral contribution using time-series data from 1960 to 2015. This paper highlighted a dynamic co-relationship among industrial sector contribution and agricultural sector contribution and economic development. In the long run, one percent change in industrial sector contribution causes an increase of 3.42 percent in the economic growth and an increase of 1.12 percent in the primary sector contribution, while in the short run industrial and service sector contributions showed significant impact on economic development and agriculture sector. The changing composition of sector contribution is going to be an important activity for the policymakers to monitor and control where the technology and integration of sectors play a significant role in economic development.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.11
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• pp.607-617
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• 2020

This study investigates the causal relationship between public and private external debt and economic growth in developing countries. Our model includes 18 selected Asian developing and transition economies from 1995 thru 2019. We employ the dynamic heterogeneous panel data methods, pooled mean group (PMG), robust cross-sectional augmented autoregressive distributed lag (CS-ARDL), and pairwise panel causality test. The results of PMG and CS-ARDL show the existence of causality between external debt and economic growth both in the short-run and long-run. The pairwise Granger causality test found the bidirectional causal relationship runs from total external debt, public external debt, and private external debt to economic growth and economic growth to external debt. The results showed first the existence of causality in the short-run and long-run between external debt and economic growth and the second, bi-directional causality that runs from external debt to economic growth and economic growth to external debt. Both the dynamic models and robust estimator found the same inferences about the impact of main variables on economic growth in Asian developing and transition economies. The findings of this study suggest to assure debt management, investment in productive sectors, increase domestic savings, decrease external dependency, and focus on international trade.

• The Journal of Asian Finance, Economics and Business
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• v.3 no.3
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• pp.27-37
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• 2016

This study uses an endogenous economic growth model to determine the long run relationship between trade openness and economic growth in China by using the data 1975-2009.It contributes to the literature by developing trade openness index. An autoregressive distributed lag approach to cointegration and rolling regression method are employed. This study tests the link between trade openness and economic growth in the case of China by using the framework of endogenous economic growth model. This study also employs the rolling window regression method in order to examine the stability of coefficients throughout the sample span. The autoregressive distributed lag (ARDL) cointegration technique and rolling regression method are used. The empirical findings indicate that trade openness (i.e. Both individual trade indicator and composite trade openness index) are positively related to economic growth in the long run and short run. Our results indicate that trade openness as measured by individual trade indicator and composite trade openness index are positively related to economic growth in the long run and short run. However, results from the rolling window suggest that trade openness is negatively linked to economic growth only for a number of years.

• The Journal of Asian Finance, Economics and Business
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• v.9 no.10
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• pp.49-59
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• 2022

This paper examined the impact of real exchange rate volatility on trade balance in Malaysia by using quarterly data from year 2000 until 2019. Generalized Autoregressive Heteroscedasticity (GARCH) model was used to extract the volatility component of real exchange rate before examining its impact on trade balance. Furthermore, Autoregressive Distributed Lag (ARDL) model was used to investigate the long-run relationship and short-run dynamic between trade balance, money supply, national income and volatility of exchange rate. Empirical results show the existence of co-movement between variables under study in the long-run. However, the results also suggest that volatility of real exchange rate does not significantly affect trade balance neither in the long-run nor short-run. The risk which is associated in the movement of exchange rate do not influence trader's behaviour toward Malaysia exports and imports. Thus, it should be note that any depreciation or appreciation in Malaysian Ringgit do not have an impact towards trade balance either it is being further improved or deteriorates. Hence, exchange rate volatility may not be too concern for policymakers. This may be partially due to manage floating exchange rate regime that has been adopted by Malaysia eventually eliminated the element of risk in the currency market.

• The Journal of Asian Finance, Economics and Business
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• v.1 no.3
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• pp.17-28
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• 2014

The paper deals with the impact of the product distribution and information technology sectors on energy resource use, carbon emissions and economic growth by examining the long-run equilibrium relationships and Granger causal relationships among these variables in South Korea. The quarterly time series data from the first quarter of 1970 to the third quarter of 2010 (163 observations) are collected and retrieved from the Bank of Korea database. The paper examines the long-run equilibrium relationships using cointegration techniques and Granger causality using vector error correction models. Test results indicate a long-run equilibrium relationship exists among these variables. In testing directional causality, both the product distribution and the information technology sectors show direct effects on economic growth but only marginal effects on carbon emissions.

• Environmental Engineering Research
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• v.22 no.1
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• pp.116-124
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• 2017

The study makes an attempt to investigate the causal nexus between carbon dioxide emissions, GDP per capita, industrialization and population with an evidence from Rwanda by employing a time series data spanning from 1965 to 2011 using the autoregressive distributed lag model. Evidence from the study shows that carbon dioxide emissions, GDP per capita, industrialization and population are co-integrated and have a long-run equilibrium relationship. Evidence from the Granger-causality shows a unidirectional causality running from industrialization to GDP per capita, population to carbon dioxide emissions, population to GDP per capita and population to industrialization. Evidence from the long-run elasticities has policy implications for Rwanda; a 1% increase in GDP per capita will decrease carbon dioxide emissions by 1.45%, while a 1% increase in industrialization will increase carbon dioxide emissions by 1.64% in the long-run. Increasing economic growth in Rwanda will therefore reduce environmental pollution in the long-run which appears to support the validity of the environmental Kuznets curve hypothesis. However, industrialization leads to more emissions of carbon dioxide, which reduces environment, health and air quality. It is noteworthy that the Rwandan Government promotes sustainable industrialization, which improves the use of clean and environmentally sound raw materials, industrial process and technologies.

• Management Science and Financial Engineering
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• v.4 no.2
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• pp.59-75
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• 1998

This paper presents an incentive system to reduce response time from a supplier. The incentive system is expressed as a contract between an assembler and a supplier who have a long-term relationship. We produce the optimal payment scheme and expected total cost, when the assembler is farsighted. We show that the farsighted assembler obtains higher effort level from the supplier than the myopic assembler. We also show that the expected total cost of the farsighted assembler is smaller in the long run, although it is initially higher than that of the myopic assembler.

• The Journal of Asian Finance, Economics and Business
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• v.6 no.4
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• pp.109-114
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• 2019

The purpose of the study to evaluate the contribution of foreign direct investment (FDI) and tourism receipts (TR) to Sri Lanka's gross domestic product (GDP). This study employs time series annual data for the period from 1978 to 2016 and EViews 10 econometrics software was used for the time series data analysis. Unit root test was done on the variables and the method chosen was the Augmented Dicky - Fuller test. Co-integration analysis was used for the long run relationship and the Granger causality test was performed to investigate the causal relationship. Recently a more conducive environment has been established after the three decade long ethnic war came to an end. In this context, the Sri Lankan government has taken positive measures to attract foreign direct investment and boost tourism in the country. This study intends to evaluate the contribution of Sri Lanka, as these two factors are considered to be very effective at increasing the GDP of a country. The empirical study shows that there is a positive and statistically significant relationship between the variable's TR and FDI to the GDP in the long run. Results of Granger causality test implied that the two-way causality promoted the economic growth of Sri Lanka.

• Environmental and Resource Economics Review
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• v.27 no.3
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• pp.521-544
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• 2018

This paper investigates the impact of ethanol mandate on the price relationship between corn and beef using the monthly time-series data from January 2003 through December 2013. In addition, we examine the non-linearity in ethanol, corn, and beef markets. Based on the threshold cointegration test, we find the symmetric relationship in pairs with ethanol production-corn price and ethanol production-beef price whereas there is the asymmetric relationship between prices of corn and beef. Employing the threshold vector error correction and vector error correction models, we also find that the corn price in the U.S is caused by both ethanol production and beef price in a long-run when the beef price is relatively high. On the other hand, the corn price does not cause both ethanol production and beef price in the long run. Findings from this study imply that demanders for corn such as ethanol and beef producers have price leadership on corn producers.

• The Journal of Asian Finance, Economics and Business
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• v.9 no.7
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• pp.27-39
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• 2022

The exchange rate is an important macroeconomic variable that influences internal and external balances. Nepal follows a dual exchange rate such that the Nepali rupee (NPR) is pegged with the Indian rupee (INR) but floats with the United States dollar (USD) and all other currencies. There have been very few studies on the exchange rate of Nepal, of which the majority focus on the bivariate relationship between exchange rate and another variable. However, this paper analyses the multivariate relationship between the USD-NPR exchange rate and major macroeconomic variables. Determinants of Nepal's exchange rate have been derived with multiple regression using the ordinary least square (OLS) approach. Since the explanatory variables could not significantly capture the movement of the dependent variable, a long-run relationship between Nepal and India's exchange rate has been analyzed using Engle-Granger cointegration to establish a relationship as suggested by a graphical representation. This explains that Nepal's exchange rate long run is determined by India's exchange rate than its own fundamentals. In addition, the macro-linkages of Nepal's macroeconomic variables have been analyzed using Standard Vector Autoregressive models followed by impulse response analysis which is useful for policy decisions. Some policy implications indicating the sustainability of Nepal's pegged regime have been drawn based on the empirical analysis.