Cointegration Test Results Research Articles

SPATIAL MARKET INTEGRATION AND PRICE TRANSMISSION OF COWPEA (Vigna unguiculata) IN NIGERIA

The study investigated spatial market integration and price transmission of cowpea in Nigeria. Secondary data on monthly basis for wholesale cowpea price per kilogram were used for the study. Augmented Dicky Fuller Test, Johansen Co-integration model, Granger Causality Test and Variance Decomposition of Vecto Autoregressive Model and Error Correction Model were used as analytical tools. Augmented Dickey Fuller test revealed that first difference all the price series were stationary and lag one (1) is the optimum lag length appropriate for the specified variables. Cointegration test results of the markets proved that despite that these markets were spatially separated geographically, they were connected in terms of price transmission across them, both in the long and short run but the level of integration is weak. It was observed that price changes are temporary and would converge to an equilibrium within a given time span. Granger causality test results indicate that one pair showed bi-directional causation between Bauchi and Enugu States. Thirty two (32) links showed unidirectional and three (3) pairs such as Niger→Abia, Niger→Lagos and Sokoto→Cross River States pairs showed no causal relationship between them. The study showed that Gombe and River States cowpea price had a faster speed of adjustment to equilibrium than other states. It also revealed that that 1% increase in Jigawa State will result to 20.5% increase in Enugu state and 1 % increase in River State will lead to 40.6% and 64.8% increase in Gombe and Nasarawa States in the short run respectively. The study concluded that, there is integration between the cowpea prices of source and destination states, but the degree of integration is weak. It is recommended that market participants should adopt standardize trading, settlement practice and invest in technology (electronic trading platform) to reduce operational inefficiencies in different markets to support integration.

THE RELATIONSHIP BETWEEN FDI AND ECONOMIC GROWTH IN INDIA. A TIME SERIES APPROACH

Foreign Direct Investment (FDI) has gained importance after the second world war. In broader sense Foreign Direct Investment incorporates the establishment of up to date and advanced facilities, mergers and acquisitions, investing the profits earned from other overseas business activities, providing loans to other companies etc. In narrow sense the Foreign Direct Investment means investment in the country other than the investors own country. FDI can be better understood by studying the real reason that why the companies have shown interest in investing abroad rather than exporting and outsourcing their products to domestic firms. In due course of time many theories and approaches were developed to explain FDI. Although several researchers have tried to explain the phenomenon of FDI, we cannot say there is a generally accepted theory, every new evidence added some new elements and criticism to the previous ones. FDI in India is playing a noticeable role in the growth and development of the country. India is one of the important countries of the world which is able to receive substantial amount of FDI. The present study has made an effort to see the relationship between the FDI and Economic growth in India. GDP has proxies for economic growth. First the Johansen cointegration test result shows the long run relationship between variables and the Granger causality test result exhibits that there is unidirectional Granger causality between FDI and GDP. Next the Multiple Regression model result presents that the estimated coefficients on FDI & exports have a positive relationship with GDP. Therefore, it is statistically revealed that FDI and Exports are instrumental in influencing the level of economic growth in India. India is having certain drawbacks like Weak infrastructure, Complicated tax structure, Restrictive labor laws, Bureaucracy and Corruption. Unless and until these challenges are met with, India will never compete with China regarding FDI inflows. KEYWORDS: Foreign Direct Investment, Gross Domestic Product, Economic Growth.

DOES COVID-19 AFFECT SHARIAH COMPLIANT STOCK? EVIDENCE FROM SELECTED OIC COUNTRIES

This study aims to examine the movements of Islamic stock markets in ten selected OIC (Organization of Islamic Cooperation) countries in relation to Covid-19 cases, providing a comprehensive analysis of market behavior during the pandemic. The countries—Saudi Arabia, Pakistan, Bangladesh, Turkey, Indonesia, Oman, Qatar, UAE, Kuwait, and Bahrain—were chosen based on their large Muslim populations. Data was collected over a one-year period from January 1, 2020, to January 31, 2021, analyzing the relationship between Covid-19 cases and Islamic stock market indices. The study employed co-integration tests to identify long-term relationships and the Vector Error Correction Model (VECM) to explore short-run dynamics. The co-integration test results show a significant long-run relationship between Covid-19 cases and Islamic stock markets in most of the selected OIC countries. Specifically, the Shariah indices in Pakistan, Bangladesh, Turkey, Qatar, UAE, Kuwait, and Bahrain have a positive and significant relationship with Covid-19 cases. Conversely, Saudi Arabia, Indonesia, and Oman exhibit a negative long-term relationship with Covid-19 cases, suggesting a different market response. These results suggest that countries with diversified economies, particularly those relying on natural resources such as oil and agriculture, were more resilient during the pandemic. This study provides novel insights into the unique responses of Islamic stock markets in OIC countries during the pandemic, highlighting regional differences in market behavior and recovery. It suggests that despite the global economic downturn, OIC countries present attractive investment opportunities, particularly due to their swift recovery and resource-based economies, offering a robust portfolio for investors during crises.

Investigating the dynamic nexus between fiscal deficit and inflation: empirical evidence from BRICS economies

PurposeThe debate surrounding whether fiscal actions are responsible for inflation has been a central focus in macro-public finance. In this regard, the present study makes a novel attempt to assess the nexus between fiscal deficit and inflation in the presence of output growth, trade openness and money supply using a balanced panel dataset from Brazil, Russia, India, China, and South Africa (BRICS) economies.Design/methodology/approachIn conducting the empirical analysis, the study initially addresses the issues of cross-section dependency, heterogeneous slope coefficients and nonstationarity. The assessment of long-run cointegration was carried out by using novel third-generation cointegration tests introduced by Westerlund and Edgerton (2008) and Banerjee and Carrion-i-Silvestre (2017). The authors utilise the advanced and latest estimation technique, the cross-section augmented autoregressive-distributed lag (CS-ARDL) model, for long-run and short-run analyses. Finally, to investigate the causal relationship between fiscal deficit and inflation within a panel framework, this study employs the novel test (JKS) introduced by Juodis et al. (2021).FindingsUsing recent econometric tests, the study validates the existence of cross-sectional dependency and slope heterogeneity. The results of the third-generation cointegration test by Westerlund and Edgerton (2008) and Banerjee and Carrion-i-Silvestre (2017) show that the variables are cointegrated in the long run. The CS-ARDL model revealed a positive relationship between inflation and fiscal deficit. The implication of this finding suggests that the fiscal deficit plays an inflationary role in BRICS economies. Finally, the JKS causality test results found a bi-directional causal association between fiscal deficit and inflation.Practical implicationsThe findings suggest several significant policy recommendations. It is recommended that a well-executed fiscal consolidation strategy be adopted to attain sound fiscal health and lower inflation. A disciplined fiscal approach is not only vital for effective monetary policy but also essential for maintaining macroeconomic stability. Monetary authorities must establish credible practices to effectively manage the macroeconomic system, and policy stances should align with the specific needs of the economy. The bidirectional causality between fiscal deficit and inflation suggests that relying solely on fiscal measures is inadequate for managing inflationary pressures or stabilising fiscal balances. Thus, a more comprehensive approach is required, including measures such as sustaining economic growth, reducing import dependency, diversifying exports and ensuring exchange rate stability.Originality/valueNumerous empirical studies have explored the link between fiscal deficit and inflation. However, most research studies within BRICS economies have focused on individual countries rather than considering the group as a whole. This limited scope may fail to capture the unique characteristics and interactions within these economies. To the best of the author’s knowledge, the present study is the first attempt to examine the issue from a panel perspective across BRICS economies. The methodological novelty of the present study is that it represents the first attempt, at least within emerging market economies, to investigate the nexus between fiscal deficit and inflation using second- and third-generation econometric models. From a policy perspective, the authors highlight that BRICS economies must prioritise fiscal discipline through measures such as reducing unproductive expenditure and improving tax collection. Close coordination between fiscal and monetary authorities is essential to ensuring that monetary policy supports fiscal consolidation efforts while maintaining price stability.

Research and Development-Driven Foreign Direct Investment and Its Ramifications on Turkey's Economic Landscape: "A VECM Approach"

The purpose of this study is to empirically investigate the impact of research and development on economic growth in Turkey. Data for this study comes from the popular World Development Indicator spanning the period from 1973 to 2022. The study employed different econometric approaches such as ADF unit root, Granger causality, and VECM. The estimate of the Johansen test revealed that there is a long-run relationship among the variables as the trace test shows two cointegrations while the maximum Eigenvalue Test indicates one cointegration test result. The Granger Causality test indicates that there is a presence of causality, which runs from economic growth to the independent variables. Turkey's diverse economies account for the variations in the estimated findings of the impulse response and variance decomposition. Furthermore, the study's conclusions suggest that the Turkish government boost its R&D spending in order to promote economic expansion. Turkey can achieve sustainable economic development by putting policies in place that reward innovation and technological advancements. The potential for economic growth in the nation can also be increased by encouraging cooperation in R&D projects between the public and private sectors.

Geopolitical risk and tourism in Turkey

PurposeThe purpose of this paper is to show the effect of Turkey's geopolitical risk on the number of international tourist arrivals to the country. When Turkish economy in 2019 is analyzed, it is seen that the share of tourism in national income is 11%. For this reason, national economy is significantly affected by changing of the number of international tourist arrivals. Security problems are an important variable affecting tourist arrivals.Design/methodology/approachThe paper focused on secondary data for the period 2000–2019 for macroeconomic variables. Accordingly, the number of international tourist arrivals was added as a dependent variable, geopolitical risk as an independent variable, gross domestic product (GDP) and economic freedom index as control variables and inflations as an external variable to the model. The residual augmented least squares–the autoregressive distributive lag (RALS-ADL) cointegration test and the dynamic ordinary least squares (DOLS) coefficient estimator were used. It allows for more robust results to be obtained when the residues do not have a normal distribution.FindingsThe RALS-ADL cointegration test result shows that there is a cointegration relationship between variables at a 1% significance level. Moreover, the DOLS coefficient estimator results indicate that an increase in economic freedom and GDP increase the number of international tourists, whereas an increase in the Geopolitical Risk Index and inflation decreases the number of international tourism arrival. It can be said that tourists consider the security and economic stability of the host country when making tourism decisions.Originality/valueTurkey is one of the most risky developing countries, as well as one of the most popular travel destinations. When the literature is examined, it has been found that studies for Turkey usually determine the relationship between the variables for a short period of time. However, to ensure sustainable growth and environment of confidence, the long-run relationship between variables should be determined so that policymakers can make more impactful decisions. Therefore, the aim of this study is to make a literature contribution, taking into account the long-term effects. In addition, unlike other studies, this study fills the gap in literature using the RALS-ADL cointegration test, which produces robust estimators.

Linkage between Crude Oil, Gold, INR-USD Reference Rate and Sensex amidst Covid-19 Pandemic: A Cointegration and Causality Analysis

The primary purpose of this paper is to analyse the shortrun and long-run association between crude oil prices, gold prices, USD-INR reference rate, and stock market index across the COVID-19 pandemic. We have employed Johansen's cointegration test to measure the long-run association among the variables. To measure the short-run association of variables, we employed vector autoregression, and then, to find the direction of causality, we used the Granger causality test. The cointegration test results show that variables are not cointegrated in the precrisis as well as during the crisis period; hence, there is no long-run association among the variables. The VAR results show that gold price was influenced by the stock market index in the pre-crisis era; however, during the crisis, no association was observed. Similar results can also be found in crude oil, USD-INR reference rate, gold price, and stock market. The results also show that the relationships among the variables are dynamic and ever-changing in the preCOVID and during the COVID-19 pandemic.

Are the Markets Vertically Integrated?: Evidence on Shallot Marketing Channels in Gorontalo Province, Indonesia

The vertical market integration of the shallot market system in Gorontalo Province is a method that can be used to estimate the price movements at each level of marketing (farmers, marketing agents, and consumers), thereby facilitating long-run and short-run equilibrium. Therefore, this study aims to analyze the vertical market integration formed between marketing channels for the shallot market in Gorontalo Province. The Engel-Granger cointegration method was used to analyze long-run equilibrium, while ECM (Error Correction Models) was utilized for short-run equilibrium estimation. The cointegration test results showed that markets at farmer and marketing agent levels, marketing agent and consumer levels, as well as farmer and consumer levels, were cointegrated. This indicated the presence of long-run equilibrium and vertical market integration. The ECM test results revealed that in the short-run equilibrium, markets at farmer and marketing agent levels, marketing agent and consumers levels, as well as farmer and consumer levels were integrated within an estimated adjustment time of one month. Based on these findings, the shallot marketing system in Gorontalo Province was vertically integrated between the marketing agents involved

Macroeconomic Factors and Stock Price Volatility at Nairobi Securities Exchange

The stock price volatility has been a problem in stock markets affecting the stock returns of firms listed at Nairobi Securities Exchange (NSE). Although some scholars have focused on the issue of high share price volatility, the issue persists and still hinders the development of the market. This study main objective is to determine the effects of macroeconomic factors on volatility of stock prices of stock market in Kenya. The specific objectives are; to establish the effects of inflation on stock prices of stock market in Kenya; to establish the effects of interest rates on volatility of stock prices of stock market in Kenya; and to establish the effects of exchange rates on stock prices of stock market in Kenya. The research was anchored on four theories and two models namely the Arbitrage pricing theory, Modern portfolio theory, information cascade theory, Fisher’s theory, Efficient market hypothesis and present value model. The research applied a causal research design, which followed the positivism philosophy of research and knowledge creation. The study focused on analyzing the effects of macroeconomic factors on volatility of stock prices of the NSE 20 share index in Nairobi Securities Exchange over a period ranging from 2009 to 2021. The design allowed collection of monthly data on the study variables and time series analysis of the hypothesized relationships between independent and dependent variables and conducted both descriptive statistical analysis and inferential statistical analysis. Descriptive statistical analysis involved generation of central tendency statistics such as mean, minimum and maximum points of the data as well as standard deviations to show the spread of the data from the mean. The inferential statistical analysis utilized in this study was Error Correction Model, guided by the results of cointegration tests. From the descriptive statistical analysis, the study found that between 2009 and 2021, interest rates demonstrated an average of approximately 9.155, inflation averaged around 150.916, foreign exchange rate maintained an average of roughly 94.219, and stock price volatility averaged 0.4%. The Error Correction Model revealed that, interest rates have no significant effect on stock price volatility of NSE 20 share index (β = -0.00034, p.value = 0.805). Similarly, inflation has no significant effect on stock price volatility of NSE 20 share index (β = -0.0000394, p.value = 0.218). However, foreign exchange has negative and significant effect on stock price volatility in Kenya (β = -0.0139, p.value = 0.017). The study concluded that interest rates and inflation have no significant effect on stock price volatility in Kenyan stock market, while foreign exchange has inverse and significant effect on stock price volatility. Thus, the study recommends that market participants, including government, investors, traders, policy makers and financial institutions, should incorporate foreign exchange rate movements into their risk management strategies. Adequate measures and policies such as market circuit breakers and enhanced risk management protocols should be in place to ensure smooth market operations and prevent any disruptions due to changing foreign exchange dynamics

What is the long-run relationship between military expenditures, foreign trade and ecological footprint? Evidence from method of Maki cointegration test

AbstractThe US leads the global economy regarding foreign trade volume and military expenditures. Increases in military expenditures and foreign trade can substantially affect environmental issues. This study's preliminary research objective is to explore the interaction of foreign trade and military expenditures with ecological concerns in the long-term of the US economy using current time series techniques. Ecological footprint, military expenditures, exports, imports, urbanization, and agricultural area variables are used in the analysis with annual data for the US economy for the period 1970-2018. A relationship in long-term between the variables is revealed by the Maki (2012) cointegration test results, considering structural break. As indicated by the findings obtained from the coefficient estimation, an increase in military expenditures, exports, and agricultural area decreases the ecological footprint, while an increase in imports increases it. In addition, the results of the time-varying causality test show that there are periodic causality relationships between the variables. To sum up, there is a negative relationship between military expenditures, exports, and agricultural area, and ecological footprint, and a positive relationship between imports and ecological footprint.

Tourism development and ecological footprint indicators in island destinations: evidence from the members of the alliance of small island states

ABSTRACT Considering the crucial debates on sustainable development it is significant to understand the link between the development of tourism in small island countries and the ecological footprint. However, to date, little knowledge is available about the contribution of tourism to the EF of small island states. Therefore, the study aims to investigate the effects of international tourism, tourism revenues, total natural resource rents, urbanisation, energy intensity, and per capita gross domestic product (GDP) on ecological footprint among the Members of the Alliance of Small Island States (AOSIS). The results of our study provide new empirical results on the impact of tourism, economic growth, energy intensity, natural resource rents, and urbanisation on the ecological footprint of the 7 AOSIS member countries. Cross-sectional dependency and cointegration test results are positive for the variables of interest. Our estimates based on CCEMG and AMG regressions showed which factors contribute to environmental degradation at the AOSIS and country levels.

Energy- GDP Nexus and the Role of Exports: An Empirical Evidence from Pakistan and South Asian Region

The purpose of the study is to present the influence of electricity generation on Pakistan's real GDP and real exports using time series data. The results of Johansen's co integration test revealed that electricity generation, labor force employed, gross fixed capital formation and terms of trade have a positive influence while the exchange rate has a negative relationship with real GDP. In another model, electricity generation, labor force employment, gross fixed capital formation, relative prices are evidence of an increase in real exports. On the other hand, the exchange rate is negatively associated with Pakistan's real exports.

EXPLORING INDIA’S ECONOMIC SCENARIO THROUGH THE LENS OF FELDSTEIN HORIOKA PUZZLE

The Feldstein Horioka Puzzle has been a subject of extensive research, with various studies offering conflicting perspectives on its validity. The puzzle focuses on the relationship between saving and investment and whether the relationship holds true at the national level. The puzzle pertains to the persistent correlation between savings and investment, implying that countries with higher savings rates should also exhibit higher investment rates, in opposition to what conventional economic models predict. In the case of India, the Feldstein Horioka Puzzle has yielded diverse conclusions. Annual data from 1970 to 2021 has been used in the study to examine the validity of the Feldstein Horioka Puzzle in India. To confirm the long-term association between saving and investment, it is crucial to consider the cointegration test results. The results of the study KEYWORDS: Feldstein-Horioka Puzzle, saving, investment, fixed exchange rate, cointegration

Understanding the Growth Implications of Debt Servicing in Nigeria

This study examined the effect of external debt servicing on economic growth in Nigeria. The specific objectives are to determine the effects of multilateral debt service, total debt service and external debt stocks on gross domestic product (GDP) growth. Time series data required for the investigation were sourced from the World Development Indicators and International Debt Statistics. The data analysis techniques include descriptive statistics, unit root tests, Johansen cointegration test and parsimonious error correction model (ECM) in addition to the post- estimation tests. The unit root results showed that all the variables are stationary at first difference. In other words, this finding revealed that the variables are integrated into order one [I(1)]. Evidence of two cointegrating equations was established from the Johansen cointegration test results, which implies that GDP growth has a long-run relationship with multilateral debt service, total debt service and external debt stocks. The parsimonious ECM showed that multilateral debt service has a negative and significant effect on GDP growth. This implies that an increase in multilateral debt service is detrimental to economic growth. The results further showed that total debt service and external debt stocks negatively and significantly impacted GDP growth. This finding indicates that Nigeria has not productively utilized the growing stocks of foreign loans to enhance its contributions to economic growth. The error correction parameter (-0.432) is negative and significant, which suggests that short-run disequilibrium can adjust to a long-run equilibrium position at a speed of 43.2 per cent. Based on the findings, this study concludes that debt servicing undermines the growth of the Nigerian economy. Thus, it is recommended that among others the government should gradually reduce its debt stock to reduce the total debt service obligations and make more resources available for economic grow

Agriculture Financing for Output Growth: A Focus on Livestock Production in Nigeria

In this study, the effect of agriculture financing such as the agricultural credit guarantee scheme fund, bank loans and advances to agriculture, and foreign aid to agriculture on livestock production was examined in Nigeria from 1981 to 2021. Annual time series data for each of the variables were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and the Organisation for Economic Cooperation and Development (OECD) Statistics. The method of data analysis includes descriptive statistics, a parsimonious error correction model (ECM), and diagnostic tests. Evidence of the first difference stationary processes was established from the unit root test results. This indicates that the variables are all integrated of order one, I(1). The Johansen cointegration test results show that the variables in the model have a long-run relationship. The parsimonious ECM shows that the agriculture credit guarantee scheme fund has a positive and significant effect on livestock output. The estimated parameters show that a 1% increase in the current value of the agriculture credit guarantee scheme fund leads to a 0.0244% increase in livestock output. Similarly, it was found that livestock output increased by 0.0183% following a 1% increase in the first-lag agriculture credit guarantee scheme fund. The findings highlight the importance of agriculture financing in boosting the growth of livestock production in Nigeria. The results further show that bank loans and advances, as well as foreign aid to agriculture, negatively and significantly affected livestock production. The error correction coefficient (-0.297) is negative and significant at the 5% level.

Interest Rate and Investment Nexus in Nigeria

Since “interest rate policy is one of Nigeria's most contentious laws and has attracted the attention of several academics, it is unknown how it will affect the country's investment base. Thus, between 1981 and 2015, this study looked at how interest rates affected investment in Nigeria. The 2016 Statistical Bulletin of the Central Bank of Nigeria included secondary data that were gathered. In order to examine the data, the study calculated the Johansen Multivariate Co-integration model and the Error Correction Model (ECM). The co-integration test results indicate that there is a long-term link between investment, as measured by gross fixed capital formation (GFCFG), and the proxies for interest rates (MLR, MPR, and SAVR).” According to the “ECM conclusion, MLR and MPR have a statistically significant negative impact on investment in Nigeria. Although SAVR increases investment, this effect is not statistically significant. Additionally, according to the ECM, 40% of the disequilibrium from the previous year would be addressed in the present time. The conclusion of this study is that high interest rates discourage investment. To encourage investors to access money, it is suggested, among other things, to lower the lending and monetary policy rates to a single digit. This would result in the nation's economy growing.”

Government Expenditure and Economic Growth in Tanzania

This study examines the impact of government expenditure on economic growth, focusing on health, infrastructure, education, and agriculture in Tanzania. The data from 1970–2020 were analysed using the STATA software. Government expenditure on education, health, agriculture, and infrastructure sectors were the independent variables, while GDP was the dependent variable. Wagner’s law of increasing state activity and Keynesian economic theory were used to guide the study. Unit root test and Johansen co-integration test were conducted. The Johansen co-integration test results indicated the absence of a long-run relationship between all explanatory variables and economic growth. However, the ARDL model revealed that government health expenditure had a low effect on economic growth compared to infrastructure, education, and agriculture expenditures; all of which had higher effects. The study recommends that more government resources be spent on substantial infrastructure.

Grain Production in Turkey and Its Environmental Drivers Using ARDL in the Age of Climate Change

This study aims to evaluate the long-run and causality relationships between the annual grain production (kg per hectare) in Turkey, fertilizer used in agriculture, the number of tractors, agricultural greenhouse gas emissions, and grain production area from 1988 to 2018. The study’s data for the years 1988–2018 were taken from the World Bank and Turkish Statistical Institute (Turkstat) databases. The autoregressive distributed lag bounds (ARDL) test was applied to estimate the cointegration between the variables. The cointegration test results confirmed a long-run relationship between the variables. The short-run estimation revealed that the error correction coefficient was negative and statistically significant. The result obtained for the error correction term estimated that the deviations from the short-run equilibrium would be corrected, and the system would converge to the long-run equilibrium within 1.05 years. Further, the long-run estimation showed that all variables included in the model had a statistically significant effect on the dependent variable. While this relationship was negative for grain production amount and carbon emission, it was positive for fertilizer use and the number of tractors. The grain areas estimated as the dependent variable in the ARDL model were in a feedback relationship with the current production and number of tractors variables, while the fertilizer and carbon emission variables were in a unidirectional causality relationship towards the grain production area. There is a negative relationship between grain production (kg per hectare) and grain production areas (hectares). A 1% increase in grain production leads to a decrease of approximately 0.30% in grain production areas. Agricultural greenhouse gas emissions, another variable that stands out with its negative impact in ARDL long-run estimation results, indicate that product groups produced as an alternative to grain have a higher emission-generating power. The other long-run estimation results reveal that the tractor variable positively affects grain production areas.

The nexus between air transport and economic growth geographically: An evidence based on heterogeneous panel data models

This study examines the nexus between air transport and economic growth on continents by considering the heterogeneity in panel data with the data of 91 countries for the period 2002–2021. According to the result of the Pedroni's cointegration test, economic growth affects air transport in the long-run. These results are also supported by the results of the error correction model. In the short-run, economic growth is found to affect air transport in a few countries in Europe, while in the long-run, this effect is found to be valid for all countries. On the other hand, Dumitrescu and Hurlin panel Granger causality test shows that air transport causes economic growth in the short-run in at least one panel. This causality is found to be statistically significant in 9 Asian countries, 6 European countries, 4 American countries, 2 Oceanian countries, and 2 African countries in the sample.

Effect of Unemployment, Inflation and Foreign Direct Investment on Economic Growth in Sub-Saharan Africa

This research explores the influence of unemployment, inflation and FDI on GDP growth from 1991 - 2021. To estimate the model's short-run and long-run phases, the ARDL model was utilized. The Granger causality test, the Error Correction Model (ECM) approach, and the cointegration test were all applied during the investigation. GDP growth, FDI, unemployment, and inflation are among the variables considered. According to the results of the stationarity test, GDP growth and inflation (INF) were stationary at the level, whereas unemployment and FDI were stationary at the first difference. The cointegration test results demonstrated that the variables under consideration had a long-run association. The ECM outcomes also found that, while unemployment and inflation have negative effects on GDP growth, FDI has a positive effect. Finally, the Granger causation analyses showed that none of the variable granger cause the other. The finding suggests that the government should implement policies that manage unemployment and inflation while also encouraging FDI inflows to improve GDP growth.