Autoregressive Distributed Lag Research Articles

Impact of macroeconomic indicators and regime change on debt stress in Zambia.

This paper quantifies the economic impact of regime changes and macroeconomic indicators on debt stress in Zambia using the Autoregressive Distributed Lag (ARDL) Bounds test. A 1% short run increase in gross domestic products (GDP) increases debt stress by 3.16% and in the subsequent year lowers it by 7.21%; in the long-run the 1% GDP increases lowers debt stress by 22%. In the long-run, a 1% rise in inflation and the lending rate negatively and positively impacted debt stress levels by -1.52% and 3.90%, respectively. Short-run shocks culminated regime change had short-run adverse impact on debt stress by 3.45% in one year and in the subsequent year by -10.35%, with the variables adjusting to long-run equilibrium at a speed of 71.5%. This is the first paper to quantify the empirical effect of macroeconomic indicators and change in Presidents on debt stress, especially in Africa were the problem of the debt trap is perpetuated. The results from the study implies that to deescalate the impact of debt stress on the economy, the electorate should vote in governments that will not fall short on growth driven macroeconomic policies, making it possible for economic sustainability to prevail; and paper seeks to promote good governance and good economic policies as a premise for sustained macroeconomic stability and development.

Impact of digital transformation on financial stability in emerging markets: evidence from Ethiopia

This insightful study delves into the intricate relationship between key digital finance adoption indicators and the stability of the banking sector in Ethiopia, an emerging economy undergoing rapid digitalization. Covering annual data from 1991 to 2022 and utilizing an autoregressive distributed lag (ARDL) approach alongside Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) techniques, the researchers uncover thought-provoking findings that challenge conventional wisdom. Contrary to expectations of a positive long-term association, the analysis reveals a statistically significant negative relationship between both internet usage and mobile phone subscriptions and Ethiopia's banking system's financial stability. This robust result, validated through rigorous robustness checks, suggests that the breakneck pace of digital transformation may outpace the development of robust regulatory frameworks and risk management practices, ultimately undermining the overall stability of the financial sector. Interestingly, the short-term analysis presents a more nuanced picture, with mobile phone subscriptions exhibiting a stabilizing effect in the immediate aftermath. This intriguing dichotomy highlights the complex and evolving dynamics at play, where the challenges of integrating digital finance with the traditional banking infrastructure and the persistence of informal financial activities potentially offset the benefits of enhanced financial inclusion and transaction efficiency. These thought-provoking findings carry crucial implications for policymakers and industry stakeholders navigating the digital revolution. Policy implications emphasize the need for robust regulatory frameworks, enhanced cyber security measures, and improved financial literacy. The findings underscore the importance of a nuanced approach to digital finance in emerging economies, advocating for continuous adaptation of policies to address the evolving landscape of financial technology. Continued inquiry can better guide policies that foster digital transformation while safeguarding stability, especially in rapidly developing regions like sub-Saharan Africa.Graphical

Agricultural Financing and Agricultural Output in Nigeria: An ARDL Approach

This study analyzes the impact of agricultural financing on agricultural output in Nigeria from 1991 to 2022. Employing an Autoregressive Distributed Lag (ARDL) model, the research examines the effects of government capital expenditure, commercial bank credit schemes, and the agricultural credit guarantee scheme (ACGS) on agricultural output. The findings indicate that both government capital expenditure and ACGS positively and significantly influence agricultural output in both the short and long run. Commercial bank credit schemes also have a positive and significant impact, although some studies report this effect as positive but not statistically significant. The study highlights the crucial role of financial support in boosting agricultural productivity and offers policy recommendations to improve agricultural financing mechanisms. These include increasing government investment, enhancing credit schemes, and strengthening the ACGS to ensure sustainable agricultural growth and economic development in Nigeria.

Autoregressive distributed lag-based dynamic uniformity modeling and monitoring approaches for superconductor manufacturing

ABSTRACT High-temperature superconductors (HTS), known for their high efficiency and low energy loss, have found profound applications across various fields, driving the demand for long, uniformly performing tapes. However, ensuring uniform performance over extended lengths of HTS tapes, often characterized by the consistency of critical current, remains challenging due to fluctuations in growth conditions during manufacturing. To elucidate the mechanisms underlying variations in tape uniformity and enable real-time monitoring of associated parameters, we propose an Autoregressive Distributed Lag (ADL)-based Dynamic Uniformity Modeling and Monitoring (ADUM2) approach. This method integrates uniformity measurement, the identification of critical process parameters and real-time monitoring within the manufacturing process. The ADUM2 approach is applied to the advanced metal organic chemical vapor deposition (A-MOCVD) process, a pilot-scale method for superconductor manufacturing. Our model demonstrates superior performance compared to benchmark methods, accounting for over 80% of the total variance in the data and identifying 13 key process parameters influencing the uniformity of HTS tapes. This study offers significant insights into the high-temperature superconductor manufacturing process and holds the potential to facilitate the production of cost-effective, uniformly performing long superconducting tapes in the future.

Policy implications of renewable energy technology, information and communication technology, and circular economy on employment levels

Employment level is vital in measuring an economy's overall health. Thus, economists always search for factors that can promote employment. However, most past studies have considered traditional economic factors as determinants of employment, while ignoring the novel factors such as renewable energy technology, information and communication technology (ICT), and circular economy. To plug this loophole in the literature, the current analysis intends to investigate the influence of renewable energy technology, ICT, and circular economy on employment. We employ the cross-sectionally augmented autoregressive distributed lag (CS-ARDL) framework for empirical investigation of the analysis. In the long-run, renewable energy technology, ICT, and circular economy foster the level of employment. In addition, human capital promotes the level of employment, while inflation lowers the level of employment in long run. In the short run, only human capital favorably influences employment. Policymakers must use renewable energy technology, ICT, and circular economy as policy options to promote employment levels.

Asymmetric Effects of Trade Openness, Financial Development, and Human Capital on Economic Growth in South Asia

ABSTRACT This study uses the nonlinear autoregressive distributed lag (NARDL) model to explore the relationship between trade openness and output growth in South Asia from 1980 to 2019. Findings reveal significant short- and long-term effects, with asymmetric dynamics. In linear ARDL models, Pakistan and India show strong positive correlations, while Bangladesh shows a negative one. Non-linear modeling reduces these effects, but Nepal still benefits. Sri Lanka’s linear model indicates a non-significant negative correlation, while the non-linear model reveals a positive relationship. These results highlight the complex dynamics between trade openness and economic growth in South Asia.

Has competition law enforcement been effective in South Africa?

ABSTRACT The South African Competition Act was crafted on the basis that it could be used to address distortions and inequalities in the market through enforcing competition. A question which has arisen is whether competition enforcement has been effective given that many economic sectors are still largely dominated by monopolies, duopolies or oligopolies. In this study, I assess whether competition enforcement has reduced inequality in South Africa by studying the link between market power and inequality, following a competition intervention in selected product markets. Using the nonlinear autoregressive distributed lag model, I assess whether competition enforcement in the market for bread, maize meal, and sunflower oil, has been effective in increasing consumer welfare, by lowering income inequality through lower prices. The findings of this study suggest that firms in these markets abuse their market power even post-intervention, such that they can raise prices and reduce consumer welfare, increasing inequality indirectly.

Impact of energy consumption on life expectancy in lower-middle-income West African countries

Life expectancy is a key determinant of a nation’s health and well-being. However, West African countries face several challenges in improving life expectancy, such as inadequate healthcare infrastructure, corruption, poor sanitation, and environmental quality due to environmental degradation. In addition, energy accessibility is an important determinant of health outcomes and environmental quality. The United Nations’ Sustainable Development Goals 7, 12, 13, 14, and 15 are directly linked with energy access; achieving these goals will lead to an improvement in energy access. Therefore, in this study, using data obtained from the World Bank and the Central Bank of Nigeria Statistical Bulletin, we investigated the impact of energy consumption and corruption on life expectancy in lower-middle-income West African countries from 1990 to 2021. The results of the cross-sectional auto-regressive distributed lag technique showed that renewable energy has a positive and significant impact on life expectancy in lower-middle-income West African countries in both the short and long run. However, non-renewable energy was found to have a significant and negative impact on life expectancy in the long run and a negative but non-significant impact in the short run. Corruption had a debilitating effect on life expectancy in both the short and long run. We recommend that policymakers should make a conscious and deliberate push toward transitioning to renewable energy through public–private partnerships to provide affordable and clean energy while tackling corruption.

IMPACT OF RENEWABLE AND NON-RENEWABLE ENERGY ON FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH

This study examines the impact of renewable and non-renewable energy on foreign direct investment (FDI) and economic growth in Nigeria from 1980 to 2017. The objectives are to assess how renewable energy influences economic growth, FDI, and the interplay between renewable and non-renewable energy. Using techniques such as the Augmented Dickey-Fuller test, Co-integration, and the Auto Regressive Distributed Lag (ARDL) model, secondary data from the World Bank were analyzed, focusing on GDP, renewable energy, non-renewable energy, and FDI. The findings indicate that GDP positively influences renewable energy in the long run, while non-renewable energy has a negative effect. In the short run, non-renewable energy and GDP significantly impact renewable energy, while FDI shows no effect. Recommendations include fostering a stable political environment to attract FDI and providing incentives like subsidies and tax holidays to promote trade and investment in renewable energy. Effective macroeconomic management is essential for translating economic growth into increased renewable energy consumption in Nigeria. KEYWORDS: Renewable Energy, Non-Renewable Energy, Foreign Direct Investment and Economic Growth.

Financial Development and Foreign Direct Investment Impact on Economic Growth: Evidence from Nepal

The interplay among financial development, foreign direct investment (FDI), and economic growth has been a subject of keen interest among scholars, both from a theoretical standpoint and through empirical research. Focusing on Nepal, this study examines the distinctive connections among economic expansion, the influx of foreign capital, and the evolution of the financial sector. Given the lack of a definitive metric for financial development, this research adopts the financial development index, along with the financial institution index and financial market index, as alternative indicators. It also considers additional variables that could influence economic growth beyond financial development and FDI. Utilizing the Autoregressive Distributed Lag (ARDL) bounds testing method and the Error Correction Model (ECM), the analysis uncovers a robust positive link between financial development and FDI in enhancing Nepal's economic output. Furthermore, both the short-term and long-term analyses prove to be reliable, devoid of issues like heteroscedasticity, autocorrelation, and multicollinearity. Importantly, the findings indicate that in the face of short-term disruptions, the dynamics between these variables adjust back to a long-term equilibrium state.

Explaining the Nexus Among Government Spending, Real Exchange Rate and Private Sector Investment in Cameroon

The main objective of this study was to investigate the nexus between government spending, real exchange rate, and private investments in Cameroon. The autoregressive distributed lag (ARDL) model was used to address issues of cointegration a time series data drawn from the World Bank WDIs spanning the period 1985-2020. The results reveal that the effect of government spending on consumption has a positive and significant effect on real exchange rate in the short run and a negative and significant effect on real exchange rate in the long run. Military expenditures as a proxy for government spending, have a positive and significant effect on real exchange rate in the long-run and a negative and significant effect in the short-run. More so, real exchange has a negative and significant effect on private sector investments in the long-run. Government consumption spending reinforces the negative effect of the exchange rate on private sector investments in the long-run and mitigates it in the short-run. The implication of these findings is that government consumption spending is key in managing the overall macroeconomic competitiveness of the Cameroon economy, which can incentivise or disincentives private sector investments.

A step toward the attainment of carbon neutrality and SDG-13: Role of financial depth and green technology innovation

Following the recommendations of COP28 and Sustainable Development Goal -13 (Climate Action), the present study examines the role of financial depth and green technology innovation in carbon neutrality and climate change. This study measures the relationship between green innovation, technological innovation, ICT, financial depth, economic growth, carbon emission, and ecological footprint from 1990-2021 in the USA. The autoregressive distributed lag (ARDL) model examines the relationship between the above-mentioned variables and their impacts on each other. Results reveal that green innovation, technological innovation, ICT, and financial depth significantly negatively impact ecological footprint and carbon emissions in both the short and long run. In contrast, economic growth positively impacts carbon emissions and ecological footprint. Green and financial innovation-centric policies are suggested to the USA to attain net zero emission and SDG-13.

Is climate change hindering the economic progress of Nigerian economy? Insights from dynamic models

This study investigates the link between climate change and economic growth in Nigeria from 1961 to 2022. To provide a robust analysis that facilitates a nuanced examination of this dynamic relationship, this study employs state-of-the-art econometric approaches, including autoregressive distributed lag (ARDL), fully modified least squares (FMOLS), novel quantile autoregressive distributed lag (QARDL), and time-varying causality. The empirical results of this study are as follows: (1) the impact of climate change on economic growth is not felt in the short run. However, climate change negatively influences economic growth in Nigeria in the long run, (2) the elasticity of climate change increases across the conditional quantile economic growth, (3) unidirectional causality from climate change to economic growth across different time dimensions. These empirical outcomes advocate for a proactive and adaptive policy framework, emphasising the need for the Nigerian government to adopt climate-smart policies.

Trade Liberalization and the Performance of the Manufacturing Subsector in Nigeria

Trade liberalization is a widely accepted policy for fostering economic growth, particularly in developing countries. Advocates argue that open economies, through increased competition, specialization, and access to global markets, outperform closed economies. However, the short-term effects on developing economies like Nigeria remain debated, especially within the manufacturing sector. Nigeria's trade policy has fluctuated between protectionism and openness, significantly influencing its manufacturing performance. Critics, drawing from dependency theory, argue that liberalization exposes weaker economies to exploitation by stronger nations, leading to trade imbalances and inhibiting industrial growth. This study investigates the nonlinear effects of trade liberalization on Nigeria’s manufacturing sector, addressing a gap in the literature by employing a quadratic approach to determine threshold effects. By incorporating a quadratic form of the trade variable, the study tests the hypothesis that trade liberalization initially boosts the manufacturing sector but results in diminishing returns as openness intensifies. The research is framed within the Laffer Curve of Trade, suggesting that beyond a certain threshold, excessive openness may harm the manufacturing sector. The AutoRegressive Distributed Lag (ARDL) model is used to assess both short-run and long-run effects, with findings indicating a convex relationship between trade liberalization and manufacturing output, highlighting the critical importance of identifying optimal policy thresholds to maximize industrial growth.

Balancing growth and preservation: Unravelling Africa’s carbon-economic nexus through the environmental Kuznets curve.

Africa is vulnerable to the challenges of global climate change, which poses a significant obstacle to achieving economic development while protecting the environment. Despite numerous Environmental Kuznets Curve (EKC) studies, evidence remains inconclusive, especially in African countries. This study delves into the carbon-economic nexus within the EKC framework across 46 African countries from 1990 to 2020. Utilizing advanced econometric techniques such as Auto-Regressive Distributed Lag (ARDL) modeling based on the Pooled Mean Group (PMG) estimator, Common Correlated Effects Pooled Mean Group (CCE-PMG), appropriate U-test, and Dumitrescu and Hurlin causality test, the research uncovers significant insights into how GDP, energy consumption, and urbanization impact CO2 emissions across different income groups. The findings strongly support the EKC hypothesis for lower-middle-income (LMI) and upper-middle- and high-income (UM&HI) countries, where economic growth initially worsens environmental degradation but eventually leads to improvements as incomes rise. However, in low-income (LI) countries, the study reveals a U-shaped relationship, suggesting that early economic growth may reduce emissions, but continued development could lead to increased environmental stress. Energy consumption is identified as a persistent driver of CO2 emissions across all income groups, while urbanization shows mixed impacts, with negative environmental consequences in LI countries and potential environmental benefits in LMI and UM&HI countries. These findings carry important policy implications for African countries as they seek to balance economic growth with environmental preservation. The research calls for targeted policies that promote green technologies, enhance energy efficiency, and implement sustainable urban planning to ensure that Africa’s development trajectory is environmentally sustainable.

Navigating Ghana's economic waters: Exploring the impact of Fiscal and Monetary policies on stock market performance

This study leverages the Autoregressive Distributed Lag (ARDL) and Exponential Generalized Conditional Heteroscedasticity (EGARCH) models to conduct a thorough examination of the impact of fiscal and monetary policies on the Ghanaian stock market from 1990 to 2022. Key findings indicate that government spending and tax revenue, as components of fiscal policy, are positively associated with stock returns, contrasting with the negative influence of the industrial production index. On the monetary policy front, interest rates are found to negatively affect stock performance, while exchange rates and the money supply exert positive influences. In the short term, government spending enhances stock returns, although the effects of GDP and the industrial production index are inconsistent, with exchange rates and money supply demonstrating a negative impact. The study underscores the profound sway that policy decisions have on stock market dynamics, underscoring an urgent need for investors and policymakers to closely monitor policy shifts and their market reverberations. A pivotal policy recommendation emerging from this research is the strategic synchronization of fiscal and monetary policies by policymakers to underpin stock market stability and growth. Such harmonization can counteract the adverse effects of policy-induced volatility, cultivating an investment-friendly climate. Investors and policymakers are encouraged to draw upon a spectrum of credible sources, encompassing financial news, governmental releases, and market analyses, to remain abreast of policy evolutions. This research offers precious perspectives on the nexus between economic policies and market movements, offering value for academic inquiry and informing practical decision-making strategies.

Unlocking sustainable development: Evaluating the impact of monetary and fiscal policies on ecological footprint in India

India's rapid economic growth underscores the increased necessity of pursuing the paradigms of sustainable development. However, concerns over environmental sustainability have risen in tandem with the country's aspirational goals for economic progress. Therefore, a crucial aspect of managing this is to create a balance between economic prosperity and environmental quality, wherein comprehending how fiscal and monetary policies affect India's ecological footprint becomes an utmost priority. In this vein, this study evaluates the impact of fiscal and monetary policies on India's ecological footprint while controlling for economic growth, squared economic growth, and renewable energy consumption between 1990 and 2022. Given the complexity of these links and well-suitability for examining both short-term dynamics and long-term relationships, this study employs the Autoregressive Distributed Lag (ARDL) model as its methodology for the empirical analysis. Thus, the findings indicate a significant long-term relationship between India's ecological footprint, fiscal policy, monetary policy, economic growth, squared economic growth, and renewable energy consumption while considering the ecological footprint as the dependent variable. Surprisingly, fiscal policy demonstrates insignificat negligible impacts on the ecological footprint in both the short and long run. Conversely, the result underscores that monetary policy effectively curbs the ecological footprint in both the short and long run. Furthermore, the study validates the Environmental Kuznets Curve (EKC) hypothesis in the long run. However, no evidence supports the EKC hypothesis in the short run. Besides, the outcome unveils that renewable energy consumption reduces the ecological footprint with no temporal differences. Hence, the policy implications derived from these findings emphasize the crucial role of monetary policy and integrating renewable energy strategies into policy frameworks for achieving sustainable development outcomes, in addition to the other policy interventions that prioritize ecological conservation alongside economic development, ensuring a balanced approach to solve environmental and economic challenges in India.

Oil Price and Energy Intensity Dynamics in Nigeria: Does Technical Change Matter?

It is critical to understand the mechanism needed to control energy intensity especially in an oilexporting country like Nigeria, because of its consequential effect on carbon dioxide emissions and environmental pollution. Increases in energy prices can lead to promotion of better technology and consequently, a reduction in energy intensity through a reduction in energy demand (consumption). This paper explores the dynamics between energy price and energy intensity to reveal the role of technical change in the equation. The study utilizes an autoregressive distributed lag (ARDL) and Toda-Yamamoto approaches. The study sample covers the period 1980 through 2021. The key contribution of this study to the literature is rooted in an understanding of the dynamics of energy intensity and its interplay with technical change in a country study as a critical piece of information for policymakers. The results indicate a change in oil price significantly affects technical innovation. However, there is no link between technical innovation and energy intensity. The plausible justification for the results is the enormity of oil subsidy policy of the Nigerian government.

The Nexus Between Foreign Direct Investment and Economic Growth in Malaysia

In recent decades, Foreign Direct Investment (FDI) has become a significant factor in promoting economic growth. Recent years have witnessed significant discourse regarding the relationship between foreign direct investment and economic growth. This research employed the Autoregressive Distributed Lag (ARDL) methodology to analyze the long-run and short-run relationships between foreign direct investment and economic growth in Malaysia over the period from 1990 to 2022. The findings indicate that foreign direct investment has a positive impact on economic growth in both the short and long term. This aligns with the fundamental principles of endogenous growth theory, which posits that foreign direct investment enhances the transfer of skills that enrich the knowledge base of the host country in both the short and long term. The study provides policymakers with insights regarding the relationship between economic growth and foreign direct investment (FDI).

The J-curve of Indonesia Trade Balance With His Trading Partners: Autoregressive Distributed Lag Method

The J-curve of Indonesia Trade Balance With His Trading Partners: Autoregressive Distributed Lag Method