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The purpose of this study is to examine real exchange rate misalignment and economic growth in Malaysia.

The result of the autoregressive distributed lag (ARDL) approach and the generalized forecast error variance decomposition.

The result of the ARDL approach shows an increase in the real interest rate differential, productivity differential, the real oil price or reserve differential will lead to an appreciation of the real exchange rate in the long run. The result of the generalized forecast error variance decomposition shows that the real interest rate differential, productivity differential, the real oil price, and reserve differential are generally important to the real exchange rate determination. Moreover, the result of the ARDL approach shows that an increase in real exchange rate misalignment will lead to a decrease in economic growth. More specifically, devaluation will promote economic growth and appreciation will hurt economic growth. Exchange rate can be a policy variable to influence economic growth. Real exchange rate misalignment should be avoided to enable the allocation of resources in the economy according to fundamentals.

A managed floating exchange rate regime could be a choice of exchange rate regime in other developing countries to achieve rapid economic growth.

The role of money and monetary policy of the central bank in pursuing macroeconomic stability has significantly changed over the period since the end of World War II. Globalization, liberalization, integration, and transition processes generally shaped the crucial milestones of the macroeconomic development and substantial features of economic policy and its framework in Europe. Policy-driven changes together with variety of exogenous shocks significantly affected the key features of macroeconomic environment on the European continent that fashioned the framework and design of monetary policies.

This chapter examines the key basis of the central bank’s monetary policy on its way to pursue and preserve the internal and external stability of the purchasing power of money. Substantial elements of the monetary policy like objectives and strategies are not only generally introduced but also critically discussed according to their accuracy, suitability, and reliability in the changing macroeconomic conditions. Brief overview of the Eurozone common monetary policy milestones and the past Eastern bloc countries’ experience with a variety of exchange rate regimes provides interesting empirical evidence on origins and implications of vital changes in the monetary policy conduction in Europe and the Eurozone.

The purpose of this paper is to study impacts of changes in crude oil price, money supply, fiscal deficit and effective exchange rate on India’s economic growth (expressing all variables in real term).

First, a simple macroeconomic model is formulated to this effect. Next, linear autoregressive distributed lag procedure and vector error-correction model are applied for growth empirics. Annual data are used from 1977 through 2015.

Rises in real crude oil price and monetized real fiscal deficits have negative short-run and long-run effects on real economic growth. Increase in real money supply and real effective exchange rate appreciation helps promote real economic growth in both short run and long run. In all cases, there is evidence of net interactive positive feedback effects among the variables in the short run. Real effective exchange rate appreciation dampens exports, but it is helpful to imports of capital goods and crude oil that contribute to economic growth. So, the net effect on the economy may be conjecturally positive.

To the best of the authors’ knowledge, this paper is unique because of the formulation of macro-economic model pertaining to the topic and its subsequent empirical verification. Moreover, this paper seems more comprehensive than some other studies, cited in the literature review.

The purpose of this paper is to re-examine the relationship between a country’s aggregate stock market and general economic development for 14 emerging economies for the period from 1995 to 2014.

The methodological approach of the paper is multifold. First, the authors use cointegration analysis to determine the simple dynamics among the variables. Second, the authors utilize vector autoregression analysis to study the dynamics among the variables for the 14 countries. Third, the authors employ panel analysis to determine common variations among the variables and across countries.

When examining the linkage between the stock market and economic development, proxied by gross domestic product growth or with gross fixed capital formation growth, the authors did not find a meaningful relationship between them. However, when the authors included additional control variables strong, dynamic interactions between the two magnitudes surfaced. Specifically, it was found that the stock market is positively and robustly correlated with contemporaneous and future real economic development and, thus, it directly contributed to a country’s economic development either through the production of goods and services or the accumulation of real capital. Thus, it can be inferred that the stock market alone is not capable of boosting economic development in these countries unless being part of a comprehensive financial system (which includes banks) as well as investment in real capital.

The policy implications are clear. Government authorities must recognize that the stock market alone is not a driver of economic development and that a sound, efficient financial system (which includes banks) must be present in order to contribute and foster economic development.

The study is original in the sense that it examines various financial and economic variables to determine the degree of (or dynamic interactions among) the stock market and the real economy for each and all emerging markets in the sample.

The purpose of this paper is to examine the impact of the size of government and public debt on real economic growth, for a panel of 175 countries around the world.

The paper utilizes the fixed‐effects and random‐effects techniques to estimate the panel regressions.

The results indicate that both the size of government and the extent of government indebtedness have negative effects on economic growth.

The findings suggest that the authorities ought to take the necessary steps to curtail excessive government spending and public debts, in order to promote economic growth.

The contribution of the paper is its application of the fixed‐ and random‐effects techniques in modeling the relation of real economic growth to the size of government and public debt, for a panel of 175 countries around the world.

The purpose of this paper is to determine how population ageing is related to economic growth as measured by real GDP per capita in Japan. This study is to address the following questions: first, how is population composition by age group related to economic change? Second, how is the dependency ratio related to economic change? And finally, what are the predictions for economic growth in the future? This study answers these questions in relation to Japan.

Regression methods were applied to single-country data for the period 1975-2011.

This study finds that an increase in the 70-74 population age group is associated with a decrease in economic growth, while an increase in the 75 and over population age group is associated with an increase in economic growth in Japan.

The relationships that were found in this study do not imply causation from demographic change to economic change.

One potential way of promoting sustainable economic growth under conditions of population ageing is to devise a comprehensive policy that focuses on demographic factors.

This study analyses population ageing and economic growth in Japan using single-country data by applying regression methods.

The aim of this chapter is to examine the role of real exchange rates in the relationship between tourist arrival and economic growth in Malaysia over the period of 2000–2018. We disaggregate Malaysian tourists into six geographical regions, namely Asia, Singapore, Europe, Pacific region, Americas, and Africa. Using a non-linear autoregressive distributed lag model, we find that the appreciation of real exchange rates with positive growth of economy plays a prominent role in influencing international tourist arrivals from Singapore, other Asian countries, Pacific region, Europe, and Americas. Our study suggests that real appreciation is important in providing some insights into the effectiveness of growth-led-tourism policies. In line with this, some implications are provided at the end of this chapter.

The paper investigates whether Granger causal relationships exist between bond market development, stock market development, economic growth and two other macroeconomic variables, namely, inflation rate and real interest rate. The study aims to expand the domain of economic growth by including a more in-depth analysis of the possible impact that bond market and stock market development has on economic growth than is normally found in the literature.

This paper uses a panel data set of the G-20 countries for the period 1991-2016. It uses a panel vector auto-regression model to reveal the nature of any Granger causality among the five variables.

The paper provides empirical insights that both bond market development and stock market development are cointegrated with economic growth, inflation rate and real interest rate. The most robust result from the panel Granger causality test is that bond market development, stock market development, inflation rate and real interest rate are demonstrable drivers of economic growth in the long run.

Because of the chosen research approach, the research results may lack theoretical foundations. Therefore, perhaps the more fully grounded interactive findings of this study can inspire theorists to fill the missing gap.

This paper includes lessons for policymakers in the G-20 countries seeking to stimulate economic growth in the long run and how they need to ensure greater stability of the interest rate and inflation rate as well as fully developing their financial markets, as both bond markets and stock markets are obvious drivers of economic growth.

This paper fulfills an identified need to study causal relationships between bond market development, stock market development, economic growth and two other macroeconomic variables, i.e. inflation rate and real interest rate.

This study aims to empirically explore whether there is causality and in which direction, i.e. whether financial development generates economic growth or whether financial development merely follows economic growth in transition European countries, including Russian Federation and Turkey, during 1998-2015.

The study uses different techniques such as pooled OLS, fixed and random effects and the Hausman–Taylor model with instrumental variables.

The regression results show a positive relationship between financial development indicators and real GDP per capita growth, thus supporting the hypothesis that finance leads economic growth. The result also shows that financial crisis has a negative effect on real GDP per capita growth. Furthermore, these findings show that government spending and inflation have a negative impact on real GDP per capita growth. The study also shows that financial development plays growth-supporting role in real GDP per capita growth in 20 European countries in transition, including Russian Federation and Turkey.

As financial development generates real GDP per capita growth, on the basis of the results of the study, a course of action that involves institutional improvement and incentivizing competition in the financial sector is recommended to the Central Banks’ policymakers in transition economies. These will in turn lead to higher real GDP per capita growth.

The study is original in nature and makes effort to promote financial development in transition European countries, including Russian Federation and Turkey. The findings of this study will be of value to Central Banks and other policymakers.

The purpose of this paper is to construct a financial development index for China and to analyze the relationship between the financial sector development index and economic growth.

This study uses Johansen‐Juselius cointegration approach to determine long run relationship between variables. To determine the strength of causal relationship variance decomposition is used. The stability of coefficient is evaluated through rolling window regression method.

The results of Johansen‐Juselius cointegration approach confirm long run relationship between financial development index and economic growth. Normalized cointegrating vector indicates that financial development index, real interest rate, capital and labor force positively determine economic growth in China. The yearly coefficient is provided by the rolling regression and indicates that financial development index negatively link to economic growth in 1991, 1992, 1994, 1995, 1999, 2000, 2003‐2005. Interest rate is negatively linked to economic growth in 1991‐1996, 2007 and 2008. The variance decomposition method validates that shocks in financial development index and real interest rate are explained by economic growth.

A financial development index for China is constructed and the relationship between economic growth and financial development is indicated.