Real GDP Growth Rate Research Articles

The Impact of Government Expenditure on Economic Growth in Malaysia

This study experimentally investigates the relationship between economic growth and government spending in Malaysia from 1990 to 2022 using time series data. The study analyzes the impact of total government spending on economic growth, covering housing, healthcare, social services, military, and education while identifying which sector has the most effect on economic growth. The Autoregressive Distributed Lag (ARDL) method is employed to evaluate the effects of these expenditures. The findings demonstrate that, in the short run, all variables significantly affect economic growth, hence refuting the null hypothesis. However, only trade openness and labor spending positively impact long-term economic growth. Research indicates that housing and education expenditures are the primary long-term drivers of economic growth in Malaysia. The data suggest that the Malaysian economy contradicts the Keynesian theory, as less government spending appears to improve the real GDP growth rate. The inverse relationship between government spending and economic growth indicates that government expenditure may not be the primary catalyst for economic growth, hence supporting Wagner’s law. These findings provide policymakers with essential insights for optimizing government spending to improve economic development results.

Macroeconomic Drivers of Inflation in Ethiopia: Evidence from ARDL Modelling

Purpose: This study identifies the macroeconomic determinants of inflation in Ethiopia from 2012 to 2023, a period marked by reforms and liberalization efforts. Despite these measures, inflation remains a critical challenge impacting Ethiopia's economic stability.Method: Utilizing the ARDL model, this study examines the relationship between inflation and various macroeconomic indicators. Data are drawn from sources such as the National Bank of Ethiopia (NBE), Ethiopian Economic Association (EEA), International Monetary Fund (IMF), and World Bank (WB). The Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests are employed to assess data stationarity.Findings: Results indicate that money supply growth, import-to-GDP ratio, budget deficit, and public expenditure have a significant positive effect on inflation in both the long and short term. Conversely, lending interest rates exhibit inflationary effects in the short term but are deflationary in the long term. Additionally, external debt-to-GDP ratio, official exchange rate, and real GDP growth rate demonstrate negative long-term impacts on inflation.Novelty: This research uniquely integrates key macroeconomic variables, analyzing their divergent impacts on inflation across short- and long-term frameworks in Ethiopia's context.Implications: The findings underscore the importance of balanced fiscal and monetary policies to curb inflation, offering critical insights for Ethiopian policymakers aiming to foster economic stability.

Monetary and fiscal policy impacts under alternative trilemma regimes

Using a new set of trilemma indexes for exchange rate stability, financial market openness, and monetary policy independence, this paper first locates more than one hundred economies in the trilemma triangle over time. Second, the paper depicts individual economies’ trilemma regimes, defined by combinations of the three indexes, in the global map. Third, the paper tests econometrically the impact of monetary and fiscal policies on key macroeconomic variables (i.e., the real GDP growth rate gap, inflation, and their variability/volatility) under alternative trilemma regimes. Fourth, it examines the roles of trilemma regimes in influencing the macroeconomic variables. Econometric analysis uses a sample of 61 emerging market & developing economies over the period 1971–2020. The two-stage least squares estimation results largely support the Mundell-Fleming predictions made for three “corner” regimes. Monetary policy is effective in raising the real GDP growth rate gap and its variability under the “flexible exchange rate” corner regime, but not under the “financially open fixed rate” regime. Monetary policy is most effective in stimulating inflation and inflation volatility under the “flexible rate” regime. Fiscal policy has a positive impact on the GDP growth rate gap under the “flexible rate” regime and positive impacts on inflation and variability/volatility measures under the “financially closed fixed rate” regime, while it has no such impact under the “financially open fixed rate” regime, a somewhat surprising finding. The “financially open fixed rate” regime has a role of achieving price stability in a financially open economy.

The Impact of Inflation on Financial Sector Performance: Evidence from OECD Countries

Abstract This research article investigates the relationship between inflation and the performance of the financial sector within OECD countries, a group critical to global economic stability. The financial sector is a basis of sustainable economic growth, and its performance is heavily influenced by the macroeconomic environment, particularly inflation. This study analyses how inflation, alongside other significant factors such as real GDP growth, government size, trade openness, and interest rates, impacts the financial sector development. By examining data from 38 OECD countries over a 20-year period (2002-2021), this research employs a comprehensive approach using both static and dynamic panel regression models. The results consistently indicate a negative correlation between inflation and the key financial sector variables, suggesting that higher inflation levels undermine financial sector performance. These findings underscore the importance of maintaining low and stable inflation to foster an efficient and stable financial sector. This study makes a valuable contribution to the literature by focusing specifically on OECD countries, which are often seen as benchmarks for economic policies and financial systems.

Factor productivity nexus economic growth in Sub-Saharan Africa: Symmetric and asymmetric panel approaches

This study examines the effect and role of total factor productivity with other major determinants on economic growth in the Sub – Saharan Africa(SSA).It employs the data obtained from the World Bank Development Indicators spanning from 1990 to 2022 using panel ARDL, GMM and their extended asymmetric non-linear (NARDL) and (NGMM) models. The NARDL and NGMM are more superior to the counterpart ARDL and GMM symmetric models in the long-run than the short-run estimation, ensuring more efficient and reliable information regarding the effects of productivity on economic growth analysis. Finally, the robust dynamic inter-temporal Granger causality tests show that asymmetrically there is bi-directional causality between the growth rate of an upward movement in total factor productivity and real GDP. There is also bi-directional causality of a downward movement in the growth rate of the terms of trade and real GDP growth rate. The empirical findings of the study are extremely important indicators for sustained economic growth in the SSA region. Hence, this research work recommends that governments should enhance total factor productivity and terms of trade through job-trainning provision and promote trading among themselves as policy tools.

An ARDL Method for Evaluating Bangladesh’s Economic Growth Concerning Female Secondary Education

The purpose of this study is to investigate the association between Bangladesh’s economic growth and female secondary education. For this reason, the effects of female secondary education, female labour force participation rate, and female fertility rate on Bangladesh’s Real GDP growth rate are investigated over the years 1995–2021, using a quantitative approach. A long-term relationship between the variables is demonstrated by the Auto Regressive Distributive Lag (ARDL) Cointegration Model, wherein the fertility rate is negatively significant and the female participation rate in the labour force and secondary education are positively significant on the real GDP growth rate. The study uses the Error Correction Model (ECM) to record the speed of adjustment. There is short-run adjustment throughout the entire system, as indicated by the statistically significant and theoretically correct sign of the error correction term coefficient. A more thorough examination is necessary as the Causality test reveals an unanticipated unidirectional association between female secondary education and economic growth.

Financial Development and Its Effect on Inclusive Growth in Kenya 2000 – 2022

Purpose: In the past decade, Kenya’s economy registered an average real GDP growth rate of 4.63 percent. Despite this growth, many people have been locked out of social and economic opportunities, with 19.1 percent of the Kenyan population living in poverty. This has intensified the need for inclusive growth, a growth model that promotes shared prosperity. Several studies have shown that financial systems that function well play a great role in the economy through the provision of key financial services that drive growth. However, there is a lack of substantial inquiry into financial development and inclusive growth in Kenya. This study sought to examine this relationship for the period 2000-2022. Methodology: The study employed a causal research design and used time series data that was collected from various databases. The level of inclusiveness in Kenya was analyzed using an inclusiveness matrix. An inclusive growth index was constructed, which was then used to empirically test the effect of financial development on inclusive growth. The data was presented in tables and figures. Findings: The inclusiveness matrix shows that despite positive economic growth rates, there is a low rate of equity growth, which shows that Kenya has a low level of inclusivity. The empirical results show that bank deposits and private-sector credit have a positive and statistically significant effect on inclusive growth. A 1% increase in bank deposits leads to a 0.074% increase in inclusive growth. When private-sector credit increases by 1%, inclusive growth expands by 0.070%. Bank return on assets has a positive but insignificant effect on inclusive growth. The study confirms that financial depth and access to financial services are the most conducive to inclusive growth in Kenya. Other determinants of inclusive growth include initial income, human capital development and macroeconomic stability. The overall findings suggest that financial development can be used to create economic opportunities for poor people in Kenya, thus reducing income disparities. Unique Contribution to Theory, Practice and Policy: The study has contributed to the ongoing conversation on inclusive growth, specifically on its measurement. The empirical results on the finance-inclusiveness nexus provide evidence-based policy interventions that can help in reducing income disparities and enhancing shared prosperity. The findings imply that policymakers and practitioners need to focus their attention on promoting financial access and financial depth in marginalized regions to create a significant impact on inclusive growth in Kenya.

Analyzing the Interplay between Economic Growth Rate, GDP per Capita, and Stock Market Performance in India: A Case Study of the BSE Index

The paper discusses the connection between GDP per capita and economic growth from 1980 to 2022, which has had a positive influence on growth of Indian stock markets. The study is based on the real GDP growth rate, which has to be considered as an economy's growth. The effects of the study show that, in relation to stock price performance, a causal link has been established between GDP growth rates and GDP Per capita. The purpose of this study is to explore the historical link between economic growth rates and GDP Per Capita on stock market performance in India, as well as changes influencing investor sentiment and future behaviour on the Stock markets. The persistence of this research is to analyse the long term connection involving Bombay Stock Exchange and macroeconomic variables. It analysis a multiple regression equation model to explore the interactions among these factors. The regression model shows that the independent factors account for a significant influence, explaining 83.4% of the variation in the dependent variable, which is the BSE index. The result shows that there is the strong positive correlation between GDP Per Capita and BSE index. Similarly, there is the weak positive correlation between Economic Growth Rate(EGR) and BSE index. The research's conclusions inform investment plans and assist interested parties in formulating policies.

Sustainable Income, Employment, and Income Distribution in Indonesia

Production and consumption activities in any economy have a direct impact on the environment. Although increased economic activity and population growth in developing countries continue to exert enormous pressure on their natural environments, the role of the environment is neglected in the estimation of national income. Such neglect at the macroeconomic level is at least in part, an important cause of environmental degradation in developing countries. Since the United Nations Conference on Environment and Development in 1992 at Rio and even as early as middle of the 1980s, a substantial literature had developed on methods to integrate the environment into the economic development process. The main assertion in this literature is that natural resources represent a form of capital that is analogous to the stock of manufactured capital. Sustainable income can be determined by allocating a portion of income to allow for the deprecation of natural capital [Ahmed, El Serafy, and Lutz (1989) and Solow (1992)]. Indonesia had average real GDP growth rates of more than five percent per year up to the early 1990s [World Bank (1994)]. But income inequality (measured by the Gini coefficient) has been high. Although inequality continues to be quite high, especially between rural and urban populations, Indonesia has been successful in poverty alleviation up to mid 1990s. In 1976 almost 40 percent of its population was below the poverty line, which in 1993 decreased to less than 14 percent [Todaro (1994)]. Income distributional consequences of economic growth would continue to be one of the main policy issues in Indonesia. This is due to its large population size, presence of different ethnic and religious groups, large diversity between rural and urban groups, variety of natural resources scattered over the country, huge distances and the effects of a far-flung archipelago [Akita, Lukman, and Yamada (1999)].

Productive and Decent Work Employment Opportunities: Reflections of Sustainable Development Goal 8

This study measures the impact of seven indicators of Sustainable Development Goals (SDGs) on Goal 8, which is about productive and decent work and employment opportunities in India. The study employs pooled ordinary least squares (POLS) methods to capture the impact of seven indicators— annual growth rate of real GDP per capita, ease of doing business, unemployment rate, labour force participation rate, participation of informal workers, fatal and non-fatal occupation injuries, and banking outlets, on SDG 8, for 2018-2021. The findings reveal that the annual growth rate of real GDP per capita, labour force participation rate, and ease of doing business influence SDG 8’s score positively and significantly. On the contrary, the unemployment rate impacts sustainable score value negatively and significantly. The inferences of the study did not unwrap a significant effect of the percentage of workers in the informal sector, fatal and non-fatal occupation injuries and the number of banking outlets on SDG8. The study recommends reducing unemployment and increasing labour force participation rates in the economy for sustainability. At the same time, policymakers must focus on enhancing the ease of doing business and the annual growth rate of real GDP per capita to realise decent work and employment opportunities. To advance sustainable development goals, especially SDG 8, fostering sustainable and inclusive economic growth is the need of the hour.

MEASURING THE EFFECT OF ENTRY INTO THE EUROZONE ON ECONOMIC GROWTH – DATA STORYTELLING USING CLUSTERING AND ANFIS

The aim of this paper is to examine the impact of a country’s entry into the monetary union on its economic variables growth rate of real GDP as well as on GDP per capita growth for the period from 2010 to 2020. The clustering method and the ANFIS method were used in the data analysis. A total of two cluster analyses were performed. The first cluster includes countries that joined the EU in 2004 and became EZ members by 2010. The second cluster refers to those countries that joined the EU in 2004 but are not yet members of the EZ. For the first individual cluster analysis two models were analysed and for the second individual cluster three models were analysed using the ANFIS method. As expected, the results showed that GDP growth is connected with trade, inflation and gross investments in fixed capital in the observed countries, while GDP per capita is connected with unemployment, interest rates and public debt. With regard to GDP growth, the difference between countries that are in the eurozone and those that are not is not significant, which is in line with other studies.

The impact of energy prices on inflation and economic growth in Mozambique: A wavelet approach and OLS estimator

AbstractThe paper is using the Continuous Wavelet Transform (CWT) and the OLS estimator to examine the relationship between energy prices (coal and gas), inflation and economic growth in Mozambique. Coal and gas are the primary commodity and source of revenue for the country. The research uses quarterly data from 2001 to 2022. Among other results, we found evidence of high coherence between macroeconomic variables (inflation and real GDP growth rate) and energy prices (thermal coal and natural gas prices) only for the frequency intervals between 1.5 and 4 years (short term). The results hold even after controlling for the real GDP growth and exchange rate; we concluded that only in the short term (1.5–4 years), there is high coherence between energy prices and inflation in the time interval between 2004 and 2012. This finding indicates no relation between energy prices, inflation and economic growth in Mozambique. Furthermore, the OLS estimates substantiate the wavelet result, showing no impact. In this context, we can conclude that there is probably a ‘Dutch disease’ or ‘resource curse’ that negates the positive effects of exploiting these resources on short‐ and long‐term economic growth.

How Brazil’s, Mexico’s and Argentina’s economies coped with the Covid-19 pandemic

This paper assesses how Brazil’s, Mexico’s and Argentina’s economies coped with the Covid-19 pandemic by generating two series of Q3 2022 to Q4 2050 Real GDP growth rate forecasts with wavelet analysis: 1) using data including the pandemic from Q4 1995 to Q1 2022 for Brazil, from Q4 1995 to Q2 2022 for Mexico and from Q1 2004 to Q1 2022 for Argentina) and 2) using data not including the pandemic from Q4 1995 to Q3 2019 for Brazil, from Q4 1995 to Q3 2019 for Mexico, from Q1 2004 to Q3 2019 for Argentina. The difference in forecast averages is an indicator of the resilience of the economy during the pandemic, the greater the difference, the better the resilience. Argentina’s economy shows a better resilience (+3.24%) than Mexico (+2.18%) and Brazil’s (-2.25%).

The Research and Forecasts on Real GDP Growth and the Unemployment Rate in the United States

Empirically, the real GDP growth rates and the unemployment rates are typically negatively correlated. From the post-COVID-19 era, countries around the world have not fully recovered from the pandemic. In this case, forecasts of GDP growth and unemployment rate are a vital reference for governments to recover economies in the future. This study collected the real GDP and unemployment rate data of the United States from 1948 to 2023, studied their relationship through linear and nonlinear regression, and predicted their future trends, respectively, with the ARIMA model. By comparing linear regression and nonlinear regression (locally estimated scatterplot smoothing) between the GDP growth rate and change in the unemployment rate, this study found that nonlinear regression can more accurately express the relationship between these two factors. The forecasts of GDP growth rates and unemployment rates provided by the ARIMA model show a relatively optimistic future with healthy GDP growth and low unemployment. However, wide ranges of confidence intervals also pointed to the danger of low GDP growth and widespread unemployment. The relationship between GDP and unemployment and their projections in this study serve as valuable references for future economic planning and incentive policies in the U.S. government. It may also be applicable to other countries that have similar economic conditions.

GLOBAL FINANCIAL CRISIS AND NIGERIAN ECONOMIC PERFORMANCE

This study focused on the impact of global financial crisis on Nigeria economic performance proxied with GDP growth rate. Specifically, this study examined the effect of global financial crisis on real GDP growth rate. Data used in the study covered the period 1991 to 2022 and were analyzed with descriptive statistics, Pearson correlation analysis method, as well as Autoregressive distributed lag co-integration approach. Result then revealed that global financial crisis has significant negative and insignificant positive effect on Nigeria economic performance that is the real GDP growth rate in the short run and long run respectively. The study recommended among others that government needs to enhance efforts geared towards technology advancement in the country as well as put in effort in enhancing agricultural products and other production activities in quantity and quality to reduce global financial crisis implication.

Impact of Demographic Dividend on Economic Growth: Bangladesh Perspective

In Bangladesh the window of opportunity has emerged since the 1979s will not last long and will not be repeated in the near future. It reaches its peak in the 2020s and will remain open until the 2035s. The demographic dividend is not given in automatic. This demographic dividend needs to be managed efficiently to capitalized better and sustained economic growth. This study attempts to estimate the contribution of the first demographic dividend on the growth rate of real GDP per capita in Bangladesh from 1991 to 2019 and provides empirical evidence concerning the net growth benefits derived from an increased share of the working-age population in Bangladesh. The analysis adopts decomposition analysis and econometric methods using time-series data. The results of regression exhibit that the relationship between demographic dividend and economic growth is positive (4.47%) which shows that demographic dividend has positive impacts on economic growth i.e., growth of the real GDP per capita.

Capital flight from BRICS nations: Does every cloud have a silver lining?

This study investigates the potential determinants of capital flight from BRICS countries. We use the residual method to estimate capital flight and employ GMM testing approach. We find a surge in the volume of capital flight from BRICS especially in the aftermath of global financial crisis. The empirical results suggest that, past values of the capital flight, real GDP growth rates, exchange rate depreciation, unemployment rate, business confidence index and financial stability indicator as significant factors causing resident capital outflows from BRICS nations. These findings call for an effective policy framework by the fiscal and monetary authorities.

Assets Liability Management, Macro-Economic Factors and Performance of Pension Funds Administration in Nigeria

The paper aims to investigate the impact of macroeconomic factors on the performance of pension funds administration in Nigeria. The paper utilized a purposive and convenience sampling method, collecting secondary data from 12 pension fund administration (PFA) companies for the years 2010-2021. The availability of audited financial statements was crucial in selecting the sample. The research design adopted was ex post facto, and descriptive analysis and inferential statistics were conducted to assess the suitability of the data. The research question was addressed through regressions, with the Hausman test rejecting the null hypothesis of a random effect model. The findings indicate that the real GDP growth rate has a negative and insignificant relationship with the performance of PFAs, as measured by the return on assets (ROA). This study highlights the importance for policy-makers and regulators in the pension funds industry to recognize the varying contributions of different assets and liabilities to company performance. It is recommended that pension funds focus on managing their assets and liabilities creatively to maintain performance despite fluctuations in macroeconomic factors.

On the government revenue on economic growth of Sub-Saharan Africa: Does institutional quality matter?

As studies report inconclusive results, the linkage between government revenue and economic growth remains a topic of debate in economic literature. This study investigates the effect of government revenue on the economic growth of Sub-Saharan African countries with the main objective of whether institutional quality matters. The panel data for 43 SSA countries were obtained from dependable data sources: World Development Indicator and Heritage Economic Freedom Index for the period of 2012–2022. The result from system GMM estimation reveals that government revenue adversely affects economic growth while institutional quality positively enhances economic growth before interacting with each other. However, the interactive coefficient of government revenue and economic growth positively affected the real GDP growth rate of SSA countries over the study periods. Precisely, before interacting with institutional quality, a percentage change in government revenue, keeping all other things constant, leads to a 0.0866% decline in economic growth while it marks a 0.2329% upsurge in economic growth in the presence of institutional quality. The result of the study further revealed that government revenue promotes the economic growth of the region when combined with institutional quality. On the other hand, foreign direct investment and openness to trade were the key sources of economic growth whereas the population growth rate adversely impacted economic growth in SSA countries during the study period under consideration. The policy implication of the study is that SSA needs to strengthen government revenue management. Further, the finding of the study implies that SSA countries need to improve institutional quality through promoting efficiency of the regulatory quality and the size of the SSA governments. In addition to this, the fast real GDP growth rate of SSA countries demands improved institutional quality indicators such as the rule of law and extended access to the open market.

The Impact of Financial Sector Development on the Sustainable Economic Growth of Pakistan

Purpose: The study examine the impact of financial Institutions and markets development on the sustainable economic growth of Pakistan.
 Design/Methodology/Approach: Time series data of Pakistan is analyzed from 1985 to 2022 by using OLS.
 Findings: Financial institutions development particularly banks are playing positive role in the real GDP growth rate of Pakistan. Financial openness has neutral effect, intermediation and liquidity has positive effect and financial institutions expansion has negative effect on the real GDP. The financial markets development is playing negative role in the real GDP growth rate in Pakistan due to weak, fragile and inefficient market institutions.
 Implications/Originality/Value: Our study findings suggest that for a sustainable economic growth Government should encourage and support financial institutions particularly banks to increase economic activities in the country.