ARDL Bounds Testing Approach Research Articles

The Impact of Tax Collection and Domestic Entrepreneurial Business Ventures on Services Sector in Pakistan: An ARDL Bound Test Approach

The services sector is the leading sector of Pakistan’s economy. It creates employment, foreign exchange earnings, research, and innovation, and significantly contributes to Pakistan’s economy. A significant amount of tax revenue is collected from the services sector. Therefore, it is imperative to analyze how taxation influences the services sector in Pakistan. The objective of the present study is to analyze the impact of tax revenue, entrepreneurial ventures, trade openness, inflation, and GDP per capita on the service sector of Pakistan. For this, data from 1980 to 2020 is used. The long-run ARDL estimates show that taxation adversely impacts Pakistan’s services sector. The results show that the variables domestic entrepreneur venture, gross national expenditures, and trade openness were significant and positively related to the service sector growth of Pakistan, while the variables tax revenue, poverty, and inflation rate were negatively related to Pakistan’s service sector growth rate. By considering the study results, it is concluded that the tax system significantly impacts Pakistan’s services sector. Due to high taxes, businesses in the services industry find it challenging to expand and compete. The policy recommendations are that the government must balance raising tax income with promoting the expansion of the services sector. Further, the government should endeavor to streamline the tax system so that companies can easily comprehend and adhere to the law. However, future research can be used the panel data form for developing countries. Further, the impact of taxation on other segments of the economy, such as agriculture and large-scale manufacturing, can be analyzed.

Modeling the long-term relationship between transportation, economic growth, poverty and environmental degradation in Tunisia

The transportation sector plays a crucial role in driving economic development, reducing poverty, and contributing significantly to environmental impacts. While there have been numerous studies exploring the interconnections among transportation, economic development, and environmental degradation, there hasn’t been extensive research on how poverty affects transport-related CO2 emissions in the Tunisian context. This study aims to address this gap by analyzing the complex relationship between poverty, economic growth, energy consumption in road transport, urbanization, trade openness, road infrastructure, and environmental degradation in the Tunisia's transportation sector from 1980 to 2020. To estimate the long-term relationship between these variables, we use the ARDL bounds test approach. The result of VECM Granger causality test indicates a feedback between road infrastructure, road energy consumption, and transport emissions in both the short and long term. Moreover, our study identifies a bidirectional causality between poverty and transport emissions, emphasizing the importance of poverty alleviation strategies that consider environmental consequences. Our research also reveals a feedback between poverty and road transport infrastructure, as well as between transport emissions and economic growth. These results provide a comprehensive overview of the factors influencing CO2 emissions in the transport sector and their relationship with poverty. They offer a valuable insight to the field of energy and environmental studies, serving as guidance to policymakers, researchers, and practitioners engaged in promoting sustainable transportation practices in Tunisia.

Electricity Consumption and Economic Growth in Kenya: an ARDL Bound Test Approach

Electricity Consumption and Economic Growth in Kenya: an ARDL Bound Test Approach

Does Health Care Utilisation Reduce Child Mortality? An ARDL Bounds Test Approach

The child mortality rate is an important indicator presenting crucial information about the health status of a country. In the current study, we examined whether health care utilisation reduced the under-5 mortality rates, an important health status indicator, in Turkey. We employed an autoregressive distributed lag bounds test. We used doctor consultation and health expenditure as the independent variables. We found out that both doctor consultation and health expenditure had negative impacts on the under-5 mortality rates in the short run; however, the effects of both variables were not statistically significant ( p > .05). Also, we showed that while the effect of doctor consultation on the under-5 mortality rates was negatively and statistically significant ( p < .05) in the long run, the effect of health expenditure was not statistically significant ( p > .05). Turkey should allocate more to health care services specifically targeting infant and child health to reduce its infant and child mortality rates.

FinTech revolution in mineral management: Exploring the nexus between technology adoption and sustainable Resource utilization in an industry 4.0 context

This study investigates the impact of FinTech adoption on sustainable mineral management policies in Australia within the context of Industry 4.0, using quarterly data from 1990Q1 to 2022Q4. Employing the ARDL-Bounds testing approach, Granger causality analysis, and innovation accounting matrix, the research finds a short-term positive association between FinTech adoption, technological readiness, and green mineral extraction. However, both in the short and long run, investment in sustainable mining technologies, government support for FinTech in mining, and environmental compliance exhibit a negative relationship with resource management. Bidirectional causality is observed between regulatory support for mining FinTech, technological finance solutions, and environmentally conscious mineral practices, while unidirectional causality exists from FinTech adoption to sustainable mining practices. Impulse response functions offer insights into the future impact of variables on eco-conscious mining policies, indicating positive influences from FinTech adoption, government support for FinTech in mining, and technological adaptability over the next decade. Conversely, eco-friendly mining investments, environmental conformity, and social license to operate will impact sustainable mineral utilization. Variance decomposition analysis highlights the most significant shocks on eco-friendly resource management over the next ten years, emphasizing the role of sustainable mining technologies, FinTech adoption, and public support for mining endeavours. In the transition to Industry 4.0, this research provides crucial insights for responsibly utilizing Australia's natural resources by leveraging financial technology and technological readiness.

The Impact of Export and FDI on the Economic Growth Rate in India: An ARDL Bound Testing Approach

The Impact of Export and FDI on the Economic Growth Rate in India: An ARDL Bound Testing Approach

Comportamento da Taxa de Câmbio nos BRICS

ABSTRACT This article aims to investigate the behavior of exchange rate in the BRICS countries, with an emphasis on exchange rate passthrough and exchange rate determination empirical models. By applying the ARDL Bounds Testing Approach Methodology, from January 2005 to December 2019. Our main results show that: i) there is a long run cointegration among the variables analyzed for all estimated models; ii) there is a very slow speed of adjustment towards the long run equilibrium; iii) there is evidence of exchange rate passthrough to inflation mainly in the long run, but not as strong as before; iv) there is no evidence of exchange rate overshooting; v) international reserve accumulation can be considered a partial explanation for the evidence of no exchange rate overshooting.

Analysis of Turkey's classic and financial kuznets curves in regards to the level of development and increased distribution

In this research, we probe the authenticity of both the Financial Kuznets Curve hypothesis and the classical Kuznets curve within the Turkish economy, exploring the interrelation between financial development and income distribution. By employing the ARDL bounds test approach in the econometric analysis, we ascertain that the Financial Kuznets Curve is applicable to Turkey. This means the correlation between income distribution and the extent of financial development adopts an inverted U-shaped pattern. Moreover, the interrelation between GDP and income distribution doesn’t form an inverted U pattern, demonstrating that the classical Kuznets curve is not pertinent in the context of Turkey. From the derived outcomes, it is inferred that prioritizing policies that accentuate financial development would constitute a more judicious economic strategy in Turkey, particularly for redressing disparities in income distribution, instead of merely focusing on economic growth.

Does Trade Openness and Human Capital abate Unemployment? Empirical Evidence from India

This study comprehensively investigates the impact of trade openness and human capital on India’s unemployment rate using time-series data from 1990 to 2019. The ARDL bound testing approach was used to determine the long and short-run relationship among the variables. The empirical findings indicate that trade openness and human capital have a negative impact on the unemployment rate in both the long and short run, suggesting that trade openness and human capital have reduced the unemployment rate in India. These results have significant implications for policymakers in crafting policies that promote continuous trade openness and help reduce unemployment in India. To succeed, trade liberalisation must be integrated into a reasonable set of structural and macroeconomic policies, supplemented by complementary policies such as maintaining an adequate inflation rate and macroeconomic stability and nurturing human capital. The study recommends that India should prioritise improving and enhancing efficient schooling and training programs, with a particular focus on career skills for young people. Policymakers can use the study’s findings to guide policy decisions to reduce unemployment and promote trade openness. JEL Codes: E24, F14, F63, C32

Impact of Foreign Direct Investment on Economic Growth: Evidence from Arab Region

Abstract Theoretical literature indicates that foreign direct investment can bring about major changes in host economies, especially in developing countries, because of its advantages in financing, transferring modern technology, contributing to the development of human capital, contributing to inventions through research and development activities, contributing to the openness of the host economy on the global markets, and other accompanying advantages, but these advantages cannot be benefited from unless certain conditions are met in the host economy. In this context, this paper sought to investigate the impact of inflow foreign direct investment on economic growth in the Arab countries region between 1990 and 2000, using ARDL bounds testing approach. The results showed that there was a very weak effect of foreign direct investment on economic growth in the long run, but in the short run there was no effect. The reasons for this are mainly due to the lack of appropriate and necessary conditions that attract and incubate foreign direct investments in most Arab countries.

Gelişmekte olan bir ülkede sektörel katma değerin ekonomik büyümeye etkisi: Zambiya örneği

With the help of the ARDL bounds test approach, the analysis of the effect of sectoral value added on economic growth in Zambia was made for the period 1994 – 2021. It has been observed that agriculture, industry and service sectors have a positive effect on economic growth in the long run. The effect of imports on economic growth was negative as expected, while the manufacturing sector and exports were found to be insignificant. The same relationship between imports and growth is also found in the short run. All other independent variables were found to have no effect on economic growth in the short run. For this reason, promotion of agriculture, industry and service sectors should be given priority for long-term impact.

Türkiye'de Yapısal Değişim, Ticari Açıklık, Yenilenebilir Enerji ve Ekonomik Büyüme Bağlantısı, 1970-2020

Purpose: This paper aims to investigate the effects of structural change, trade openness, and renewable energy on economic growth in Türkiye. 
 Design/Methodology: Structural change is defined as the shift of resources from the agricultural sector to the industrial sector and then to the services sector. In the structural change process, it is accepted that the manufacturing industry is the engine of growth. However, since the mid-1970s, especially in the post-1980 period, the manufacturing industry has lost its importance. In addition, trade liberalisation and energy policies came to the fore in this process. In this context, this paper analyses the determinants of economic growth within the framework of the structuralist approach. For this, we apply the ARDL bounds test approach and apply FMOLS, DOLS, and CCR for robustness check.
 Findings: According to the ARDL bounds test results, the manufacturing industry, renewable energy, and trade openness affect economic growth positively; however, the coefficient of renewable energy is statistically insignificant. The results of the robustness check (FMOLS, DOLS, and CCR) also confirm these findings. The effect of the manufacturing industry on economic growth is greater than that of other variables.
 Limitations: To analyse the impact of structural change on economic growth in the Türkiye, the study is limited to the period 1970-2020.
 Originality/Value: The originality of our paper is that it analyses the impact of structural transformation (such as the manufacturing industry, trade openness, and renewable energy) on long-run economic growth in Türkiye.

The role of the Foreign Direct Investment inflows on export in Azerbaijan: An ARDL approach

Purpose ― This study aims to investigate the impact of FDI inflows on Trade in Azerbaijan from 1993 to 2021. Method ― This study uses the datasets from the World Bank Database. It employs the Augmented Dickey and Fuller (ADF), Phillips and Perron (PP), Zivot and Andrews (ZA), ARDL bounds testing approach, and the Granger Causality tests for the empirical part of the study.Findings ― The bound test shows the presence of cointegration between FDI and Export. The estimated long-run equation suggests a positive and significant relationship, whereas the estimated short-run equation indicates a positive but insignificant relationship between FDI and export. Additionally, the results of Granger causality test show a unidirectional causality running from FDI to export. Implications ― Since the FDI inflows show a positive effect on the export of Azerbaijan, most foreign investments come into the oil and gas sector. Accordingly, oil and gas products and services account for a significant share of exports in Azerbaijan. Policymakers might need new regulations to attract more attention from foreign investors to non-oil sectors.Originality/value ― There were vast studies about FDI and trade relationships in different countries with different techniques. This study is unique because it employs a new methodology and the latest dataset in which Azerbaijan was a focused area for the first time.

The Impact of Takaful Insurance on the Manufacturing Industry in Malaysia: Empirical Evidence through ARDL Bounds Testing Approach

In post-financial crisis, the interconnection between the financial sector and real activity is gaining more interest in the literature. Given that the insurance sector represents a large part of the financial globe, it will be essential to explore its impact on the real economy. Further, the expansion of participative finance, in the last decade, requires contextualising the question in this sense. However, this paper experiments with the effect of Takaful insurance on real activity in Malaysia. Hence, an ARDL model is estimated on quarterly data between 2010Q1 and 2017Q4. The results show a positive and significant impact of the increase in Takaful contributions to manufacturing activity. On the same side, a long-term relationship between the two sides is established in the image of a significative cointegration.

Modeling the climate change impacts on major fruits production: Recent evidence from Pakistan

The literature on the effect of climate change on agricultural products has grown over the years. However, evidence on how climate change affects fruit industry remains limited. This research fills the gap by estimating the effects of climatic parameters on major fruits production in Pakistan. In this study, the ARDL model is employed to estimate the long three decades of data. The ARDL Bounds testing approach confirmed the long-term co-integration of the variables under consideration. The findings show that climatological elements such as temperature and CO2 emissions have a detrimental impact on apples output whereas precipitation has a favorable impact on both in the long and short run. Furthermore, the findings reveal that precipitation and CO2 emissions have a negative impact on bananas output in Pakistan, both in the long and short run. Temperature, on the other hand, has a favorable and considerable effect on bananas output. In addition, the outcomes reveal that temperature, CO2 emissions, and precipitation all have a favorable impact on mangoes, guavas, and mangosteens production in both the long and short run. The findings of this study guide the formulation of appropriate policies to mitigate the negative impacts of global warming on the fruits industry and ensure sustainable food production in the country to meet domestic demand and international trade goals.

Impact of Banks’ Credits and Capital Market Dynamics on the Performance of the Manufacturing Sector in Nigeria: An ARDL Bounds Testing Approach

In this study, we examined the impact which bank credits and some capital market variables had on the performance of the Nigerian manufacturing sector. Secondary time series data from 1986 to 2017 was used which was analysed using an ARDL bounds testing to cointegration. The results showed that while MCR negatively and significantly impacted on manufacturing output, TVTR and ASI positively and significantly increased the growth of the manufacturing output. BCRM, on the other hand, impact on manufacturing output was positive but insignificant. We made some recommendations.

The Examination of the Relationship Between Foreign Direct Investment and Trade in Turkey: ARDL Approach

Abstract This paper is aimed to examine the effect of Foreign Direct Investment inflow on Trade (Export, Import) in Turkey. The study copes the time span from 2006 Q2 to 2019 Q4. The time series datasets, those are retrieved from CBT and FRED database are used in applied econometrical methods such as ADF, PP, Zivot Andrews Unit Root Tests, ARDL bounds testing approach, and the Granger Causality tests, to accomplish the statistical part of the research. Based on the findings, it was supported that there was a positive relationship between FDI and Trade. Additionally, the outputs of Granger causality test indicated that there is a unidirectional causality running from FDI to Trade (Export and Import).

Petrol Fiyatlarının Ulaştırma Sektörü Hisse Senedi Getirilerine Etkisi: Türkiye Hisse Senedi Piyasası Örneği

This study examines the impact of crude oil prices on transportation sector stock returns of Turkey. ARDL Bound Test approach is utilized to investigate both long-run and short-run impacts. Research findings show that crude oil prices have an adverse impact on stock returns in short-run since oil is a crucial input for transportation firms. However, in long-run, increasing oil prices enhance stock returns in the sector. This result can be explained by the oligopolistic market structure of the industry. This study also investigated the impact of other factors on stock returns such as macroeconomic activity, aggregate stock market performance, and global economic policy uncertainty. The results imply that transportation sector returns are also highly sensitive to macroeconomic and aggregate stock market performances. Besides its academic contribution to the literature, the findings of this research offer precious practical implications for financial investors, industry stakeholders, and policymakers as well.

Pattern of Agricultural Progress in India’s North-East and the Contributing Factors: An Econometric Analysis

Despite being blessed with rich agro-climatic conditions, the largest agrarian state in India’s North-East, Assam recorded relatively poor agricultural growth, since independence. The question of agricultural performance in terms of use of factors and growth pattern always arise that seems to vary in different stages of policy shift. Agricultural diversity increased in the initial phase with the expansion of agricultural area but slowed down in the later stages. However, the nature of agricultural diversity and use of resources including land allocations reflects the adaptation of farming community, absorption of labour force and sustainability of earning of farmers. The objectives are to analyze: i) the pattern of agricultural growth, diversity; ii) relative contribution of crop diversification, yield and area towards output growth in the pre-Green Revolution, Green Revolution and Post-Reform period; iii) association of various factors with crop yields in the short run and the adjustment process in the long run. Using secondary data, semi-log linear and spline regression functions we examined the growth and stationarity of growth processes is checked by ADF test. Times series analyses like cointegration and ARDL bound testing approach has been followed to examine the relation of various factors with yield of various crops in the short and long run. The ECM also provides the process of adjustment and CUSUM(Q) test is used for checking fitness of the models. Changes in diversity are analyzed through Herfindahl Index and the additive decomposition technique is employed to examine changing contribution of growth of yield, area and cropping pattern and their interactions. The result reveals varied impacts of main weather variable (rainfall), technological factors and cropping intensity on the yields of crops in different phases since 1950-51. Area effect on output and cropping pattern growth though declined, yield growth contributed increasingly in successive sub-periods in Assam. However, the contribution of modern technology towards the growth has not been uniform in the three major stages of agricultural transformation in Assam.

The linkages between trade, financial openness, and economic growth in China: an ARDL-bound test approach

ABSTRACT This research examines the linkages between trade, financial openness, and economic growth in China from 1992 to 2021, using Granger causality analysis in the ECM model to identify the trend of a causal relationship between the variables. The results confirm the validity of export-led growth and the supply-leading hypotheses in China. Moreover, China’s broad money is output-oriented, and the significance of exports to China’s economy is supported by the influence of real income and imports caused by exports. Lastly, the research highlights that domestic credit expansion by the banking industry stimulates global trade growth; however, import changes cause broad money fluctuations. Policymakers can utilize these findings to identify the trend of the growth and development of the trade and financial industry of the economy, as there is substantial proof that a meaningful relationship is occurring between economic growth, trade, and the financial development sectors of the economy.