Applying the Pooled Mean Group Panel ARDL Technique to Analyse the Impact of Uncertainty on Economic Growth in the ASEAN-5

Abstract

The correlation between uncertainty and economic growth is an interesting research topic that has attracted different views from many scholars. The present study aimed to empirically analyse the linkages among numerous uncertainties, such as; the uncertainty index (UI), the consumer price index (CPI), foreign direct investment inflows (FDI), trade openness (TO), innovation (INNO) on economic growth (GDP) in the ASEAN-5 countries: Malaysia, Indonesia, Singapore, The Philippines and Thailand between 1960 and 2020. The association between economic growth and its determinants over the long and short-term was estimated using the pooled mean group (PMG) panel autoregressive distributed lag (ADRL) technique. The findings showed that all computed coefficients had predicted signs and were statistically significant in the long run. In addition, economic growth was significantly impacted by FDI and the uncertainty index, both in the short and long term. The uncertainty index, CPI, FDI, innovation, and economic growth, thus, had a unidirectional relationship. On the other hand, no reciprocal relationship existed between trade openness and economic growth for the ASEAN-5 nations.