Bootstrap Panel Granger Causality Research Articles

BANKING SECTOR DEVELOPMENT AND ECONOMIC GROWTH DEVELOPING COUNTRIES: A BOOTSTRAP PANEL GRANGER CAUSALITY ANALYSIS

The purpose of this paper is to revisit the Granger causal relationship between banking sector development and economic growth for forty developing countries in the period 1970-2012. We devised two indices to comprehensively assess the development of the banking sector and employed a panel bootstrapped approach for Granger causality testing. This method adequately addresses concerns related to cross-sectional dependence and heterogeneity. Our empirical findings offer modest backing for the supply-leading, demand-following, and complementarity hypotheses. Moreover, our analysis suggests a causal relationship between banking sector development and economic growth across twenty-five countries. This paper investigates the relationship between banking sector development and economic growth in developing countries using a Bootstrap Panel Granger Causality Analysis. The banking sector plays a crucial role in fostering economic development by mobilizing savings, allocating capital efficiently, and channeling investments into productive sectors. However, the precise nature of the causal linkages between banking sector development and economic growth remains subject to empirical scrutiny, particularly in the context of developing economies characterized by diverse institutional settings and economic structures. Employing a panel data approach, this study examines the causal dynamics between banking sector development and economic growth across a sample of developing countries. By leveraging the richness of cross-country variation and time-series dynamics, we aim to provide a nuanced understanding of the symbiotic relationship between banking sector development and economic growth. Our discoveries illuminate the causal connection between banking sector advancement and economic growth in developing nations, presenting significant insights for policymakers, economists, and scholars. Through informing policy discussions and promoting data-driven decision-making, this research contributes to the crucial goals of sustainable development and inclusive growth in developing economies.

Assessing energy consumption and economic growth interrelations in Asia-Pacific: A multivariate approach with panel FMOLS and bootstrap Granger causality tests

This study investigates the cointegration and causal relationship between energy consumption and economic growth using data from 16 Asian and Pacific countries from 1970 to 2010. The expanded production function is used in this investigation; this function considers not only labor but also financial resources. This study investigates whether or not a rise in energy demand is associated with a healthy economy. Human capital, in addition to material and labor resources, is taken into account by this operation. One of the first studies to adopt a multivariate method and add human capital was undertaken on the energy-growth nexus. Using the panel unit root and cointegration tests, this study confirms the existence of a long-run cointegrating connection between these variables. These studies recognize the presence of cross-sectional interdependence, according to specific reports. The significance of considering the interconnection of various countries is confirmed by comparing estimates from panel heterogeneous fully modified ordinary least squares (FMOLS) models with those from unceasingly efficient and fully modified models. Nonetheless, the bootstrap panel Granger causality test findings demonstrate that economic growth is a causal factor in rising energy consumption in the region, indicating that the relationship is not constant across countries.

Informality and Taxation: Evidence from Seven Latin American Countries

This study examines the impact of the shadow economy on taxation in seven Latin American countries between 1993 and 2018. The technique is built using a MIMIC model and a bootstrap panel Granger causality approach. The results show that the variables are related causally, with the shadow economy having a detrimental impact on tax revenues. Governments are advised to embark on labor market and institutional reforms, reduce barriers to firm entry, provide a reliable and sufficient regulatory environment, and provide employee social protection as ways to reduce the informal economy.

Do Internet Development and Urbanization Foster Regional Economic Growth: Evidence from China’s Yangtze River Economic Belt

Internet development and urbanization are widely perceived to have a significant impact on the economy and sustainability in China. However, existing studies fail to consider their interaction patterns and directions with economic growth in China’s Yangtze River Economic Belt (YREB). This study applies a bootstrap panel Granger causality test to examine the causal relationships between Internet development, urbanization, and regional economic growth for the YREB‘s 11 provinces. The main findings are as follows: (1) Internet development, urbanization and regional economic growth exhibit cross-sectional dependence and province-specific heterogeneity in the YREB. (2) Granger causality from Internet development to economic growth exists in most provinces, while Granger causality from economic growth to Internet development and two-way Granger causality are only observed in economically developed provinces, such as Shanghai, Jiangsu, Zhejiang, and Chongqing. (3) Granger causality from urbanization to economic growth exists in nine provinces, except for Hubei and Guizhou. However, the reverse Granger causality is only confirmed in Jiangsu, Anhui, and Hubei. This suggests that urbanization significantly improves economic growth efficiency, but the effect of economic growth on urbanization is restricted by regional bias policies. Therefore, the local government should implement tailored economic policies and establish an interactive mechanism to help China leverage its potential for economic growth and sustainability.

The nexus between female unemployment and labor supply: evidence from Arab countries

With an emphasis on groups like women who have an elastic labour supply, this study examines the link between unemployment and labour market participation in Arab countries from 1991 to 2021. The bootstrap panel Granger causality method is used to determine the causal direction, considering cross-sectional dependency, slope heterogeneity, and structural breaks. The results provide mixed evidence for the invariance, discouraged worker, and additional worker hypotheses, which qualify earlier findings. Of the 17 countries, only 4 are in favour of the unemployment invariance theory. Policies that raise the growth path of capital, productivity, and increase the effective working-age population may influence the unemployment rate.

Renewable and nonrenewable energy consumption, economic growth, and CO2 emissions in Eastern and South African countries: the role of informality.

This study investigates the role of informality in the relationship among renewable and nonrenewable energy consumption, economic growth, and CO2 emissions in a panel of 19 Eastern and South African countries. The empirical strategy exploits the panel generalized method of moments, panel fixed effects models using the Driscoll-Kraay standard errors, panel method of moments quantile regressions, and the Dumitrescu-Hurlin bootstrap panel Granger causality analysis. The results are fourfold. First, nonrenewable energy consumption is positively associated with CO2 emissions, while renewable energy consumption is not. Second, there is a nonlinear ∩ -shaped relationship between economic growth and CO2 emissions, consistent with the environmental Kuznets curve (EKC) hypothesis. Third, the results show a nonlinear ∪ -shaped relationship between informality and CO2 emissions, suggesting that higher informality is associated with lower CO2 emissions up to a certain critical point beyond which further increases in informality precipitate higher CO2 emissions. Fourth, the results show unidirectional causality from CO2 emissions to renewable energy, from CO2 emissions to nonrenewable energy, from informality to CO2 emissions, and feedback causality between GDP growth and CO2 emissions.

Active labor market as an instrument to reduce unemployment

In order to have an impact on the labor market, welfare states must implement active labor market policies (ALMPs). The effectiveness of ALMPs has only been the subject of a few numbers of studies, the majority of which only take into account the short-term effects of ALMPs and use aggregate data. We examine the impact of public spending on female and male unemployment rates by disaggregating data on unemployment for nine OECD countries and focusing on long-term effects of ALMPs, primarily to determine whether there is evidence of causation between the variables. Based on the bootstrap panel Granger causality test, the estimates account for cross-sectional dependence, slope heterogeneity, and structural breaks. Although the causality direction varies by country, our study demonstrates that ALMPs are helpful at lowering unemployment. It's interesting to notice that these policies appear to have the most positive effects for women. Policymakers must provide appropriate support for ALMPs in order to effectively lower unemployment.

Relationship Between Energy Security and Economic Growth: A Bootstrap Panel Granger Causality Analysis

This study is aimed to examine the relationship causality between energy security and growth for a total of 74 countries including 39 high-income countries, 23 upper-middle-income countries, and 12 lower-middle-income countries by using the Kónya´s (Kónya, 2006) Bootstrap Panel Granger Causality approach. According to the results obtained, it has been determined unidirectional causality relationship from energy security risk level to GDP for 14 countries and from GDP to energy security risk level for 20 countries. On the other hand, there is bidirectional causality between energy security risk level and GDP for 22 countries, while there is no causality between energy security risk level and GDP for 18 countries. Moreover, the results are also demonstrated that the rate of detection of a causality relationship increases as one moves from high-income group countries to lower-middle-income group countries. The results, which evidence the existence of a relationship between energy security risk level and economic growth for many countries, reveal the importance of the policies to be implemented in this direction.

Industrial growth versus agricultural growth in eight post-communist countries

Several theories of regional economic development and structural economic transformation have emphasized the important role of agricultural development in industrialization and vice versa. In the view of Benjamin Franklin, the agricultural and nonagricultural sectors are competitive, whereas in Alexander Hamilton's opinion the two sectors are complementary. Does agricultural growth support or compete with industrial growth? To address this question, we examine the causal relationship between the sectoral output in agriculture and manufacturing in eight post-communist countries. The bootstrap panel Granger causality approach is utilized to detect the direction of causality. The findings show that the growth complementarity hypothesis is confirmed in five out of eight countries under review. Policy implications are discussed.

Causality Between Urbanization and Economic Growth: Evidence From the Indian States

There is an abundance of studies on the urban-rural dichotomy. In the mainstream economic and regional science literature, the urban centers have usually been described as growth machines, growth poles, or growth foci, and urbanization as a driver of economic growth. It is commonly assumed that the assemblage of factors of production in urban centers will create economies of scale, and that economic growth will trickle down from these centers to the periphery. Most of these studies hypothesize a mono-directional causal relationship between urbanization and economic growth. However, there are ample possibilities of reverse causalities in regions where the propulsive powers of urban centers are weaker and where social overhead capital (SOC) is not adequately developed in non-urban regions. In this situation, even minor economic changes in non-urban economies will cause the growth of the urban population. The present paper attempts to examine the relationship between urbanization and economic growth in India at the state level during 1971–2020 by employing a bootstrap panel Granger causality test. It is found that in India the majority of the states display a unidirectional Granger causality from economic growth to urbanization. This finding indicates not only a lower propulsive power of urban centers, but also an unbalanced development of SOC between urban centers and rural areas, hence causing a migration of people to cities with a rise in their income in order to take advantage of the urban facilities.

Nexus of tourism demand, economic growth, and external competitiveness in leading tourist destination countries

The study investigates the causal relationship between tourism demand, economic growth, and external competitiveness in leading tourist destination countries using the bootstrap panel Granger causality test between 2005 and 2019. To determine the direction and the sign of the causality, study first test the existence of cross-sectional dependence among the countries and slope homogeneity across the countries. The empirical findings of the study produced varying results for countries reflecting the heterogeneity among the sample countries. Results also provide evidence of tourism-led growth, economic-driven tourism growth, feedback, and neutrality hypotheses. Moreover, results show evidence of tourism induced external competitiveness and vice-versa. Therefore, even though the study's empirical results have a significant implication for policymakers, regulators, and sector representatives. It is not fair to suggest one size fits all policies for the sample countries.

Energy-Growth-Globalization Nexus in N-11 Countries: New Insight from Bootstrap Panel Granger Causality

Energy-Growth-Globalization Nexus in N-11 Countries: New Insight from Bootstrap Panel Granger Causality

The Relationships between Social Security Funds and Macroeconomic Changes. An Empirical Analysis of the EU-CEE Countries

Objective : This paper investigates whether and which of a set of macroeconomic variables may be a Granger cause for changes in the financing of the social security sector, and vice versa . Research Design & Methods : Descriptive statistics, the bootstrap panel Granger causality test, and Pesaran CD test for cross-sectional dependence in panels and Pesaran’s CIPS test for unit roots in panels were applied. Panel data of the CEE countries, which are members of the European Union, was used. The research period was 2000–2019. Findings : It was determined that lagged values of macroeconomic indicators can improve forecasting of social security sector expenditure. In turn, understanding the social security sector’s expenditure may contribute to better forecasting of the macroeconomic indicators considered for the research. Implications / Recommendations : Maintaining stable economic growth may contribute to the financial stability of the social security system. Contribution : The research is the first to refer to the financing of the social security sector. The study provides a framework that takes full account of the main elements of social security systems and associates them with the most significant macroeconomic indicators.

Can education lower the environmental degradation? Bootstrap panel Granger causality analysis for emerging countries

Can education lower the environmental degradation? Bootstrap panel Granger causality analysis for emerging countries

CAUSALITY LINKAGES BETWEEN INCOME INEQUALITY AND FINANCIAL GLOBALIZATION FOR G7 COUNTRIES

The main aim of this study is to evaluate the causality linkages between income inequality and financial globalization for G7 countries over the period 1970-2015. The bootstrap panel Granger causality analysis by Kónya (2006) is used. The empirical results indicate that there is a causality linkage between income inequality and financial globalization in most of the G7 countries. Furthermore, it is shown that income tax has a significant role on the causality linkage. Hence, in order to reduce income inequality, policy makers should apply high taxes on top income, using fiscal policy instruments

Application of Bootstrap Panel Granger Causality Test in Determining the Relationship between Renewable and Non-Renewable Energy Consumption and Economic Growth: a Case Study of OPEC Countries

The purpose of this article was to investigate the relationship between renewable and non-renewable energy consumption on economic growth in 10 oil-exporting countries for the period 1980 to 2018. To get to this purpose, the bootstrap panel causality test has been deployed. According to the findings of this study on renewable energy consumption, the results of the causality test showed that the growth hypothesis for Ecuador is well grounded. Besides, the conservation hypothesis is valid for Algeria and Iran. The feedback hypothesis based on a two-way relationship between renewable energy consumption and economic growth in Saudi Arabia and the UAE has also been confirmed, while there was evidence of the neutrality hypothesis for Angola, Iraq, Nigeria, Venezuela, and Congo. Regarding non-renewable energy consumption, the feedback hypothesis has been confirmed for Ecuador, UAE, Iran, Saudi Arabia, Nigeria, Venezuela, and Congo. The conservation hypothesis was observed for Iraq and Algeria. Also, there has been no causal relationship between non-renewable energy consumption and economic growth for Angola, and the neutrality hypothesis is confirmed.

Credit Composition and Economic Growth: Households versus Enterprises

Although numerous studies have been carried out on economic growth and credit expansion, very few studies have examined direct causality between growth and credit market composition. Furthermore, with a few exceptions, most previous studies have tested how credit market development affects macroeconomic variables by using aggregate data. The purpose of this paper is to examine empirically the causal nexus between enterprise credit, household credit, and economic growth by using a sample of six OECD countries. The bootstrap panel Granger causality approach is utilized to detect the direction of causality. The results show that there is a unidirectional causality running from credit to economic growth in the case of the household sector and unidirectional causality running from economic growth to credit in the case of the enterprise sector in the most countries under review. The policy implication of the findings is that credits offered to households contribute to a greater extent to economic growth than credits offered to enterprises.

Are environmental regulations holding back industrial growth? Evidence from China

To achieve sustainable economic development, many developing countries have continuously tightened their environmental regulations; for example, the Chinese government revised some policies to protect the environment, such as the Environmental Protection Law, and levied environmental taxes. Will these regulatory tools affect the growth of the industrial economy? What are the differences in the influence of various types of environmental regulations? Based on city-level panel data from China, this paper applied a difference-in-difference (DID) model and a bootstrap panel Granger causality test to investigate the relationship between two types of environmental regulations (command-and-control environmental regulation and market-Based incentive environmental regulation) and industrial growth. The results show that (1) Command-and-control environmental regulation (CAC) has a significant inhibitory effect on industrial growth. (2) In most regions, there is no significant Granger causality between market-based incentive environmental regulation (MBI) and industrial growth. (3) Compared with command-and-control environmental regulation, market-based incentive environmental regulation allows more flexibility for enterprises, which is more beneficial for technological innovation. Meanwhile, market-based incentive environmental regulation does little to suppress industrial growth.

FDI and financial development: evidence from eight post-communist countries

This paper empirically examines the effects that host countries’ financial development (FD) has on foreign direct investment (FDI). The departure from earlier studies of the role of FD in attracting FDI is in the multidimensional FD index. Thus, this paper investigates the causal relationship between FDI and FD in eight post-communist countries. The bootstrap panel Granger causality approach is utilized to detect the direction of causality. The findings show that there is only a unidirectional causality running from FD to FDI in six countries out of eight under review. The policy implication of the findings is that countries wishing to attract more FDI should implement measures to improve access to external finance and this should be accompanied by a well-functioning and adequately regulated financial system.

G20 ve OECD Ülkelerinde Doğrudan Yabancı Yatırımlar ile Yenilenebilir Enerji Arasındaki Nedensellik İlişkisi: 2005-2017

This study investigates the link between foreign direct investment (FDI) and renewable energy (RE) as a primary energy source for G20 countries, OECD member countries and Worldwide. For this purpose, bootstrap panel Granger Causality Analysis developed by Konya (2006) was employed for over the period 2005-2017 to examine the existence of causality. The analysis results indicate that there is bidirectional causality between FDI and RE for the G20 and the worldwide. On the other hand, for OECD member countries, there is a one-way causality from RE to FDI. The findings state that foreign direct investments carry the developments that will make renewable energy use widespread, and the use of renewable energy makes the country suitable for foreign direct investment.