Impact of Ethiopian Trade Balance: Bound Testing Approach to Cointegration
Issue:
Volume 4, Issue 4, August 2015
Pages:
92-98
Received:
3 July 2015
Accepted:
14 July 2015
Published:
25 July 2015
Abstract: This study is an attempt to examine the short and long-run relationship between the trade balance, income, money supply, and real exchange rate in the case of Ethiopian economy. The bounds testing approach to co integration and error correction models, developed within an autoregressive distributed lag (ARDL) framework is applied to annual data for the period 1979/80 to 2012/13. Additionally, variance decompositions (VDCs) are used to draw further inferences. The result of the bounds test indicates that there is a stable long-run relationship between the trade balance and income, money supply, and exchange rate variables. The estimated results show that the coefficient of the real exchange rate variable is positive and statistically significant at a 10 percent level confirming the hypothesis that real depreciation succeeds in improving trade balance of Ethiopia in the long run. Similarly, The coefficients of money supply and income positive and statistically significant at 1and 5 percent level it provides that money supply and income play a strong role in determining the behavior of the trade balance. The error correction model result indicates all of the coefficients of variables are statistically insignificance. This implies that all variables do not affect trade balance in the short run. Based on the coefficients of the variables statistically significant level exchange rate policy can help improve the trade balance but it will have a weaker influence than economic growth and monetary policy.
Abstract: This study is an attempt to examine the short and long-run relationship between the trade balance, income, money supply, and real exchange rate in the case of Ethiopian economy. The bounds testing approach to co integration and error correction models, developed within an autoregressive distributed lag (ARDL) framework is applied to annual data for...
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Fiscal Variables and Economic Growth in Oil-rich Developing Countries (1981-2013)
Olusi Janet,
Dada Matthew Abiodun
Issue:
Volume 4, Issue 4, August 2015
Pages:
99-108
Received:
23 June 2015
Accepted:
16 July 2015
Published:
10 August 2015
Abstract: This study examined the growth effect of fiscal variable specifically government expenditure in the oil-rich developing countries of Nigeria, Indonesia and Saudi Arabia. The study covered the period 1981 to 2013. The secondary data used for the study were fetched from World Development Indicators (WDIs) 2014 edition and Pen World Tables version 8.1. The variables included in the analysis include GDP, aggregate government expenditure, imports and exports of goods and services all in US dollar. Others include broad money as a percentage of GDP, annual inflation rate, annual growth rate of population and total population. We employed Time Series Econometric techniques of analysis. Long-run equilibrium relationships were found to exist between government expenditure and economic growth in all the three countries. The result also shows that government expenditures have positive and significant effects on economic growth. However, the magnitude of these effects varies across the three countries. This finding therefore called for the support for fiscal space hypothesis in these countries to boost economic growth. We therefore concluded that government expenditure among other variables enhanced economic growth in the oil-rich developing countries of Nigeria, Indonesia and Saudi Arabia during the period under investigation.
Abstract: This study examined the growth effect of fiscal variable specifically government expenditure in the oil-rich developing countries of Nigeria, Indonesia and Saudi Arabia. The study covered the period 1981 to 2013. The secondary data used for the study were fetched from World Development Indicators (WDIs) 2014 edition and Pen World Tables version 8.1...
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