Granger-cause Economic Growth Research Articles

A revalidation of the savings–growth nexus in Pakistan

The aim of this study is to understand the relationship between savings and economic growth in Pakistan over the period 1971–2011. The cointegration and the Granger causality tests are adopted to examine the relationship between the variables. The results confirm the existence of long-run equilibrium among the variables of interest. Meanwhile, savings have positively affected economic growth in both the short run and long run. The Granger results also show that savings Granger-cause economic growth. Based upon these findings, we confirm that savings is a catalyst of growth for the Pakistani economy. Additionally, our results seem more likely to support the capital fundamentalists because the long run estimation as well as the Granger causality results also indicates that savings growth can effectively spur economic growth in Pakistan.

The Granger Causality Relationship between Foreign Direct Investment (FDI) and Economic Development in the State of Qatar

In this study, we investigate the causality relationship between the inflows of fo reign direct investment and economic development as measured by Gross Domestic Product (GDP) per capita in the State of Qatar during the period 1970 - 2010. It also investigates the direction of the relation between the two variables using sever al tests: Augmented Dickey-Fuller (ADF), Johansen cointegration and Granger Causality tests. Robust empirical findings dra wn from the Johansen cointegration analysis suggest the existence of such long-run equilibrium relationship between FDI and GDP. Furthermore, causality test indicates that there is a bi- directional causality on the FDI-GDP relationship for one, two and three year lags that imply, strongly indicating that foreign capital penetration Granger-causes economic growth in Qatar. The test results show that foreign direct investment in the short-run is affected mainly by gross domestic product and government spending which implies that the government should continue its efforts to create the economic environment which is attractive to foreign direct investment. The findings confirm the strong and positive relationship between economic growth of Qatar and FDI inflows.

An analysis of a causal relationship between economic growth and terrorism in Pakistan

The present study investigates the causal relationship between terrorism and economic growth in Pakistan by incorporating capital and trade openness in production function. The study covers the time period of 1973–2010. The ARDL bound testing approach has been applied to cointegration to examine the long-run relationship between terrorism and economic growth. The VECM Granger causality approach is used to test the direction of causality between terrorism and economic growth. Our empirical results confirm the existence of long-run relationship between terrorism and economic growth. The Granger causality analysis indicates that terrorism is Granger cause of economic growth. The feedback effect is found between terrorism and trade openness. The relationship between terrorism and capital is bidirectional.

Does Finance Promote Growth In Botswana?

The discourse on the finance-growth connection is yet to be laid to rest. This paper contributes to the discourse by analyzing data (1981-2010) from Botswana. The paper uses Fully Modified Ordinary Least Squares regression technique and Pairwise Granger Causality for analysis. The results show that when domestic credit to the private sector as a share of GDP is used to proxy financial development, there is a negative, significant relationship between financial development and economic growth in Botswana. However, when the ratio of liquid liabilities (M3) to GDP is used to measure financial development, a positive, significant relationship is found. Pairwise Granger Causality test results reveal that economic growth Granger-causes a reduction in financial development when domestic credit to GDP ratio is used to proxy financial development. On the other hand, when M3 to GDP is used to proxy financial development, finance precedes growth. The paper, therefore, argues that finance may promote growth in Botswana via the expansion of the size of the financial intermediary sector.

FDI and Economic Growth in Western Region of China and Dynamic Mechanism: Based on Time-Series Data from 1986 to 2010

In this paper, we analyze causal relationship between foreign direct investment (FDI) and economic growth in western region of China using time-series data from 1986-2010. The analysis is conducted by the means of time-series estimations through ADF unit root test, co-integration tests, error-correction analysis and Granger causality test. The purpose of the paper is to empirically investigate the impact of economic growth on FDI in western region and its dynamical mechanism. The results suggest that inward FDI flow does not lead to Granger-cause economic growth, and economic growth also does not exert significant impacts on FDI inflows, which means some studies have exaggerated the positive effect of FDI on economic growth, and eclipsed the influence of economic growth on FDI.

Exploring the nexus of electricity consumption, economic growth, energy prices and technology innovation in Malaysia

This study principally attempts to investigate the relationship between electricity consumption on the one hand and economic growth, energy prices and technology innovation in Malaysia on the other over the period, 1970–2009. The results of this study indicate that electricity consumption and its determinants are cointegrated. Specifically, the empirical results show that income positively affects electricity consumption, while energy prices and technology innovation negatively affect it in Malaysia over a long run. The Granger causality results reveal that technology innovation Granger-cause economic growth and electricity consumption in Malaysia. Moreover, we find that electricity consumption and economic growth Granger-cause each other both in the short and in the long run. Therefore, policymakers should increase investment in electricity infrastructure to ensure that electricity supply is sufficient for economic growth and development and at the same time encourage technology innovation to minimise the usage of fossil fuels. This could strike a balance between environmental quality and economic growth in Malaysia.

Tourism And Economic Growth In Kenya: An Empirical Investigation

In this study, we examine the dynamic relationship between tourism sector development and economic growth using annual time-series data from Kenya. The study attempts to answer one critical question - Is tourism development in Kenya pro-growth? The study uses an ARDL-bounds testing approach to examine these linkages and also incorporates trade as an intermittent variable between tourism development and economic growth in a multivariate setting. The results of our study show that there is a uni-directional causality from tourism development to economic growth. The results are found to hold irrespective of whether the causality is estimated in the short run and long run. Other results show that international tourism Granger-causes trade, while trade Granger-causes economic growth in Kenya in both the short and the long run.

Analysis of Causality between Tourism and Economic Growth Based on Computational Econometrics

To investigate the causal relationship between China’s domestic tourism and economic growth, this paper performs co-integration analysis and Granger causality test by making use of annual time series data from 1984 to 2009. Co-integration analysis indicates that there are long-term and stable equilibrium relationships between the development of China’s domestic tourism and economic growth. The results from the ECM model indicate that there are short-term disequilibrium relationship between the development of China’s domestic tourism and economic growth. An adjustment mechanism from short term to long term in the relationship between the development of China’s domestic tourism and economic growth can be found in the ECM model. In addition, bidirectional Granger causality between China’s domestic tourism and economic growth is demonstrated. The development of China’s domestic tourism is the Granger cause of economic growth, China’s economic growth is the Granger cause of development of domestic tourism as well. Our findings imply that China may enhance its economic growth by strategically strengthening the tourism industry while not neglecting the other sectors which also promote growth.

An Empirical Study of Relationship between Economic Growth and CO<sub>2</sub> Emission of Shanghai

The relationship between CO2 emission and economic growth of Shanghai is discussed, which is realized in the way of mutual study of the cointegrating analysis of GDP, energy consumption and CO2 emission from 1993 to 2009 of Shanghai and the study of causality based on VECM. As can be seen from the conclusion, in the long run, the relationship between the economic growth and CO2 emission of Shanghai is unidirectional, i.e., the growth of economy will promote the quantity of emitted CO2.However, CO2 emission is not the Granger cause of economic growth. But in the short run, they constitute no cause-and-effect relationship. Therefore, some suggestions regarding the energy conservation and emission reduction policies of Shanghai are presented based on an empirical analysis.

O mercado de debêntures e o financiamento produtivo no Brasil: uma análise de cointegração e causalidade

This paper analyzes the evolution of the Brazilian corporate debt market and its role on corporate financing from 1994 to 2009. Besides the description of the corporate debt market, the paper analyzes, by using co-integration and causality analysis, if there is long-term relationship between corporate debt market and Brazilian economic growth and the direction of the relationship. Additionally, the corporate debt market is compared to the banking market as complementary and competitive instrument of Brazilian productive financing. Tests suggest that there is significant co-integration between the variables under analysis and, in general, the corporate debt market is Granger-cause of economic growth, which means that there is significant influence of debt volume growth on stimulating economic growth. It was also verified that the corporate debt market seems to be more relevant than the banking market in influencing economic growth.

Capital market development and economic growth: Empirical evidence from South Africa

In this paper, the dynamic causal relationship between stock market development and economic growth in South Africa is examined – using the newly developed ARDL-Bounds testing procedure. The study uses three proxies of stock market development, namely stock market capitalisation, stock market traded value and stock market turnover, against real GDP per capita, a proxy for economic growth. Using the 1971-2007 data sets, the empirical results of this study show that the causal relationship between stock market development and economic growth is sensitive to the proxy used for measuring the stock market development. When the stock market capitalisation is used as a proxy for stock market development, the economic growth is found to Granger-cause stock market development. However, when the stock market traded value and the stock market turnover are used, the stock market development seems to Granger-cause economic growth. Overall, the study finds the causal flow from stock market development to economic growth to predominate. The results apply irrespective of whether the causality is estimated in the short-run or in the long-run.

Is the tourism-led growth hypothesis valid for malaysia? a view from disaggregated tourism markets

This research note attempts to re-investigate the validity of tourism-led growth hypothesis for Malaysia based on the data set of 12 different tourism markets from January 1995 to February 2009. The error-correction modelling-based cointegration test shows that economic growth and international tourist arrivals are cointegrated for all tourism markets. Nevertheless, the Granger causality results demonstrate that not all international tourism markets Granger-cause economic growth. Therefore, identification of potential tourism markets is vital for implementing effective tourism marketing policies. Copyright © 2010 John Wiley & Sons, Ltd.

Electricity consumption and economic growth in South Africa: A trivariate causality test

In this paper we examine the causal relationship between electricity consumption and economic growth in South Africa. We incorporate the employment rate as an intermittent variable in the bivariate model between electricity consumption and economic growth—thereby creating a simple trivariate causality framework. Our empirical results show that there is a distinct bidirectional causality between electricity consumption and economic growth in South Africa. In addition, the results show that employment in South Africa Granger-causes economic growth. The results apply irrespective of whether the causality is estimated in the short-run or in the long-run formulation. The study, therefore, recommends that policies geared towards the expansion of the electricity infrastructure should be intensified in South Africa in order to cope with the increasing demand exerted by the country's strong economic growth and rapid industrialisation programme. This will certainly enable the country to avoid unprecedented power outages similar to those experienced in the country in mid-January 2008.

Finance-growth-poverty nexus in South Africa: A dynamic causality linkage

This paper attempts to examine the dynamic causal relationship between financial development, economic growth and poverty reduction in South Africa—using a trivariate causality model. The study attempts to answer one critical question. Which sector leads in the process of poverty reduction in South Africa—the financial sector or real sector? Using cointegration and error-correction models, the empirical results of the study show that both financial development and economic growth Granger—cause poverty reduction in South Africa. The study also finds that economic growth Granger-causes financial development and, therefore, leads in the process of poverty reduction in South Africa. This applies irrespective of whether the causality test is conducted in the short-run or in the long-run. The study, therefore, recommends that policies geared towards increasing economic growth should be intensified in South Africa in order to make the economy more monetised, and to reduce the high level of poverty currently prevailing in the country.

An Empirical Study of Economic Growth and Expanding Role of Government in Ghana: 1965–2004

Wagner's law is tested by using traditional versions and our own versions which account for prices. Results show that Wagner's law exists in Ghana. However, there is no empirical support for the view that increases in government expenditures lead to economic growth. Both traditional Granger causality and autoregressive distributed lag estimates of long-run and error correction models show that economic growth Granger-causes changes in government expenditures, not vice versa. This suggests that while the government might facilitate economic growth in Ghana, it cannot serve as an engine of economic growth.