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1 – 10 of 123Amira Mohamed Emara and Nashwa Mostafa Ali Mohamed
This paper aims to investigate the relationship between global economic fluctuations and human development through four transmission channels (foreign direct investment (FDI)…
Abstract
Purpose
This paper aims to investigate the relationship between global economic fluctuations and human development through four transmission channels (foreign direct investment (FDI), official development aid (ODA), remittances and export earnings) in Egypt as an open developing economy, in the period 1990–2015.
Design/methodology/approach
The paper uses a vector autoregressive model, which implies examining the impulse response functions and variance decompositions.
Findings
The results indicate that human development is negatively affected by global economic fluctuations through the four channels, namely, ODA, FDI, export earnings and remittances. In addition, the most effective transmission channels are FDI in the short run and export earnings in the long run.
Originality/value
While a large body of literature addresses the direct impact of business cycles and economic shocks on human development, only some studies focus on the indirect impact. The contribution is to identify the indirect impact of global economic fluctuations on human development in a developing economy, considering four transmission channels and to determine the most important of these channels. Moreover, using the human development index is an addition in this paper as most previous literature depends on other human development indicators such as children’s health, employment and schooling.
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The purpose of this paper is to explore and analyse the dynamic relationship between remittances inflows of Egyptians working abroad and asymmetric oil price shocks.
Abstract
Purpose
The purpose of this paper is to explore and analyse the dynamic relationship between remittances inflows of Egyptians working abroad and asymmetric oil price shocks.
Design/methodology/approach
This study uses a vector autoregressive (VAR) model to explain the impulse response functions (IRFs) and the forecast error variance decomposition (FEVD). The rationale behind using these tools is its ability to examine the dynamic effects of our variables of interest.
Findings
The impulse response functions confirmed that remittance inflows have various responses to asymmetric oil price shocks. For instance, inflowing remittances increase in response to positive oil price shocks, while it decreases in response to negative oil price shocks. Also, the results indicate that the responses are significant in the short and medium-run and insignificant in the long run. The magnitude of these responses reaches its peak or trough in the third year. Further, the variance decomposition reveals that oil price decreases are more influential than oil price increases.
Originality/value
This means that remittances inflows in Egypt are pro-cyclical with oil price shocks. That explained by the fact that more than one-half of those remittances sent from GCC countries where real economic growth is very pro-cyclical with the oil prices. This empirical assessment will help policymakers to determine the behaviour of remittances and highlights the impact of different kinds of oil prices shocks on remittances. Unlike the little existing literature, this study is the first study applied the VAR model using a novel dataset spanning 1960-2016.
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Aiza Shabbir, Shazia Kousar and Farzana Kousar
The purpose of this study is to investigate the role of natural resources in economic growth by taking evidence from Pakistan.
Abstract
Purpose
The purpose of this study is to investigate the role of natural resources in economic growth by taking evidence from Pakistan.
Design/methodology/approach
Total five variables are used in this study, i.e. GDP, population density, water renewable resources, deforestation and the emissions of CO2, based on time series data from 1972 to 2016. The annual data is collected from World Development Indicators, Food and Agriculture Organization and Pakistan Economic Survey. Vector error correction model technique is applied to find out the long-run results.
Findings
Results depict that all variables have a negative and significant relationship over the long run at 5% level of significance. It is observed that 1% increase in population accordingly will degrade GDP by 0.334496%. Correspondingly, 1% increase of water renewable resources will degrade GDP by 0.450647%. Findings are aligning with the study of. Moreover, 1% increase in deforestation will diminish GDP by 0.127821%. If we increase 1% of CO2, GDP will be reduced by 0.802420%.
Research limitations/implications
Results depict that all variables have a negative and significant relationship over the long run at 5% level of significance. It is observed that 1% increase in population accordingly will degrade GDP by 0.334496%. Correspondingly, 1% increase of water renewable resources will degrade GDP by 0.450647%. Findings are aligning with the study of. Moreover, 1% increase in deforestation will diminish GDP by 0.127821%. If we increase 1% of CO2, GDP will be reduced by 0.802420%.
Practical implications
Family planning may be our last hope. Viable and fruitful family planning ought to be introduced. Status of ladies should be brought up in the society by providing education and employment opportunities. Time of marriage ought to be brought up to 25 years in case of males and 23 in case of females; this can help in decreasing the number of births. Having a large population will not automatically translate into economic prosperity. Investment in well-being, education, sound economic policies and good governance will bring about accelerated economic growth.
Originality/value
In recent years, the issue of worldwide water shortage has attracted increasing consideration within scholarly community, non-administrative organizations and the media. Water shortage is a significant and ever-increasing danger to the environment, human well-being, advancement, energy security and the worldwide food supply. This work will introduce real issues and requirements relating to water, environmental changes and their impact on economic growth of Pakistan.
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Ibrahim M. Awad, Ghada K. Al-Jerashi and Zaid Ahmad Alabaddi
This empirical paper aims to examine the impact of interest rate (IR) and political instability (POLINS) on Palestine's domestic private investment.
Abstract
Purpose
This empirical paper aims to examine the impact of interest rate (IR) and political instability (POLINS) on Palestine's domestic private investment.
Design/methodology/approach
A set of econometric techniques of time series data are adopted to meet the study objectives. They include regression analysis, unit root tests, cointegration test, ARDL & Bound tests, VAR test and Granger causality test.
Findings
The study's primary results complement the neoclassical approach, which states that the IR is negatively associated with domestic private investment. The empirical results reveal that there is no long-run relationship. Also, there is no causality between domestic investment and lending rates. Accordingly, these findings alert policymakers to draw a series of steps to minimize the IR at a minimum to stimulate investment for improved economic growth and development.
Practical implications
There is still no national currency in Palestine. The Palestinian Monetary Authority (PMA) is advised to set an appropriate ratio of the IR for the currencies-in-circulation in Palestine for boosting investment and economic development.
Originality/value
This paper provides new background information to both policymakers and researchers on the main determinants of investment in Palestine using econometric analysis. Accordingly, this critical issue is required to be examined in Palestine for stimulating investment.
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Zhonglu Liu, Haibo Sun and Songlin Tang
Climate change not only causes serious economic losses but also influences financial stability. The related research is still at the initial stage. This paper aims to examine and…
Abstract
Purpose
Climate change not only causes serious economic losses but also influences financial stability. The related research is still at the initial stage. This paper aims to examine and explore the impact of climate change on financial stability in China.
Design/methodology/approach
This paper first uses vector autoregression model to study the impact of climate change to financial stability and applies NARDL model to assess the nonlinear asymmetric effect of climate change on China’s financial stability using monthly data from 2002 to 2018.
Findings
The results show that both positive and negative climate shocks do harm to financial stability. In the short term, the effect of positive climate shocks on financial stability is greater than the negative climate shocks in the current period, but less in the lag period. In the long term, negative climate shocks bring larger adjustments to financial stability relative to positive climate shocks. Moreover, compared with the short-term effect, climate change is more destructive to financial stability in the long run.
Originality/value
The paper provides a quantitative reference for assessing the nexus between climate change and financial stability from a nonlinear and asymmetric perspective, which is beneficial for understanding climate-related financial risks.
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Joseph Mawejje and Nicholas M. Odhiambo
This study investigates the dynamic causality linkages between fiscal deficits and selected macroeconomic indicators in a panel of five East African Community countries.
Abstract
Purpose
This study investigates the dynamic causality linkages between fiscal deficits and selected macroeconomic indicators in a panel of five East African Community countries.
Design/methodology/approach
The research design is based on panel cointegration tests, panel cross-section dependence tests, panel error correction-based Granger causality tests and panel impulse response functions.
Findings
Results show that there is long-run feedback causality among fiscal deficits and each of the variables include gross domestic product (GDP) growth, current account balance, interest rates, inflation, grants and debt service. Short-run Granger causality dynamics indicate that there is feedback causality between fiscal deficits and GDP growth; no causality between fiscal deficits and inflation; no causality between fiscal deficits and current account; no causality between fiscal deficits and interest rates; feedback causality between fiscal deficits and grants; and no causality between fiscal deficits and debt service. Impulse response functions show positive and significant impacts of current account balance, inflation and grants; negative and significant impacts of real GDP growth and lending rates; and insignificant effects of debt service.
Research limitations/implications
While the study examines the dynamic causality between fiscal deficits and selected macroeconomic indicators in the East African Community, the analysis excludes South Sudan due to significant data limitations.
Practical implications
In light of the East African Community's aspirations to achieve convergence on key macroeconomic targets, including the fiscal deficit, this research provides novel insights on fiscal policy determinants and causality dynamics.
Social implications
The dynamic relationships between fiscal policy and macroeconomic variables may have social implications for welfare, equitable growth and distribution of resources.
Originality/value
With a focus on the East African Community, this paper contributes to the literature on the macroeconomic determinants of fiscal deficits in regional economic communities.
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Nan Li and Liu Yuanchun
The purpose of this paper is to summarize different methods of constructing the financial conditions index (FCI) and analyze current studies on constructing FCI for China. Due to…
Abstract
Purpose
The purpose of this paper is to summarize different methods of constructing the financial conditions index (FCI) and analyze current studies on constructing FCI for China. Due to shifts of China’s financial mechanisms in the post-crisis era, conventional ways of FCI construction have their limitations.
Design/methodology/approach
The paper suggests improvements in two aspects, i.e. using time-varying weights and introducing non-financial variables. In the empirical study, the author first develops an FCI with fixed weights for comparison, constructs a post-crisis FCI based on time-varying parameter vector autoregressive model and finally examines the FCI with time-varying weights concerning its explanatory and predictive power for inflation.
Findings
Results suggest that the FCI with time-varying weights performs better than one with fixed weights and the former better reflects China’s financial conditions. Furthermore, introduction of credit availability improves the FCI.
Originality/value
FCI constructed in this paper goes ahead of inflation by about 11 months, and it has strong explanatory and predictive power for inflation. Constructing an appropriate FCI is important for improving the effectiveness and predictive power of the post-crisis monetary policy and foe achieving both economic and financial stability.
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Mert Akyuz, Muhammed Sehid Gorus and Cihan Gunes
This investigation aims to determine the effect of trade uncertainty on domestic investment (DI) and foreign direct investment (FDI) for the Turkish economy from the first quarter…
Abstract
Purpose
This investigation aims to determine the effect of trade uncertainty on domestic investment (DI) and foreign direct investment (FDI) for the Turkish economy from the first quarter of 2005 to the first quarter of 2020.
Design/methodology/approach
The authors adopt the vector autoregression (VAR) model augmented with Fourier terms. Using this methodology, the authors obtain the empirical results of the impulse-response functions and the variance decomposition analysis.
Findings
The empirical results demonstrate that a shock to trade uncertainty has a slight negative impact on DI for up to approximately 1.5 years, whereas its impact on FDI is negative but long-lasting. Moreover, the contribution of trade uncertainty to FDI is relatively higher than to DI in the error variance decomposition for the investigated period. These empirical results can be beneficial for shaping the Turkish authorities' trade policies in the following periods.
Research limitations/implications
These findings have implications within the macroeconomic setting. Government authorities can provide tax exemptions for specified sectors and debureaucratize investment processes for both domestic and foreign entrepreneurs. Additionally, institutional quality and property rights should be protected strictly and developed gradually.
Originality/value
This study is the first to examine the impact of world trade uncertainty on Türkiye’s DI and FDI. Because trade uncertainty might act as fixed costs, this creates the option value of waiting and seeing the market, and firms hesitate to incur investment.
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Luis Berggrun, Emilio Cardona and Edmundo Lizarzaburu
This article examines whether deviations from fundamental value or closed-end country fund's discounts or premiums forecast future share price returns or net asset returns.
Abstract
Purpose
This article examines whether deviations from fundamental value or closed-end country fund's discounts or premiums forecast future share price returns or net asset returns.
Design/methodology/approach
The main empirical (econometric) tool is a vector autoregressive (VAR) model. The authors model share price returns and net asset returns as a function of their lagged values, the discounts or premiums, and a control variable for local market returns. The authors also conduct Dickey Fuller and Granger causality tests as well as impulse response functions.
Findings
It was found that deviations from fundamental value do predict share price returns. This predictability is contrary to weak-form market efficiency. Premiums or discounts predict net asset returns but weakly.
Originality/value
The findings point to the idea that the closed-end fund market is somewhat predictable and inefficient (in its weak form) since the market appears to be able to anticipate a fund's future returns using information contained in the premiums (or discounts). In particular, the market has the ability to anticipate future behaviour because growing premiums forecast declining share price returns for one or two periods ahead.
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Muhammad Mushafiq and Tayyebah Sehar
The purpose of this study is to find the empirical causal relationship between Islamic bank term deposit rates (IBTDR) and conventional bank term deposit rates (CBTDR) in the…
Abstract
Purpose
The purpose of this study is to find the empirical causal relationship between Islamic bank term deposit rates (IBTDR) and conventional bank term deposit rates (CBTDR) in the short-term.
Design/methodology/approach
This study analyzes the short-term causal relationship between the term deposit rates (TDRs) for the time period of three years 2015 to 2018 on monthly data of IBTDR and CBTDR. Granger causality test, variance decomposition and impulse response function are applied to examine if there is any short-term causal relationship between the IBTDR and CBTDR.
Findings
This empirical study establishes that the IBTDR are dependent on the CBTDR in the short-term.
Practical implications
This research provides an insight for the customers of TDRs of the Islamic banking system. This study is not only a significant insight for the end-users but also for the regulators and researchers as it provides important empirical evidence. This could lead to further research on the reasons for causality.
Originality/value
There has not been any study of this nature in Pakistan to identify the causality of the two-TDRs. This research expands the dynamics of research in the context of the banking sector.
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