Pub Date : 2021-02-25DOI: 10.1177/2277978721989922
Iman Pal, S. Kar
Several strands of the static and dynamic theoretical constructs and the empirical applications in the subject of economics owe substantially to the well-known principles of physical sciences. The present article explores as to how the development of the popular gravity models in international trade can be traced back to Newton’s law of gravitation, and to both Ohm’s Law and Kirchhoff’s Law of current electricity, as well as to the pattern recognition techniques commonly deployed in scientific applications. In addition to surveying these theoretical analogies, the article also offers numerical applications for observed trade patterns between India and a set of countries. JEL Classifications: F41, F42, C61, F47
{"title":"Gravity Models in International Trade: An Exploration in Econo-Physics","authors":"Iman Pal, S. Kar","doi":"10.1177/2277978721989922","DOIUrl":"https://doi.org/10.1177/2277978721989922","url":null,"abstract":"Several strands of the static and dynamic theoretical constructs and the empirical applications in the subject of economics owe substantially to the well-known principles of physical sciences. The present article explores as to how the development of the popular gravity models in international trade can be traced back to Newton’s law of gravitation, and to both Ohm’s Law and Kirchhoff’s Law of current electricity, as well as to the pattern recognition techniques commonly deployed in scientific applications. In addition to surveying these theoretical analogies, the article also offers numerical applications for observed trade patterns between India and a set of countries. JEL Classifications: F41, F42, C61, F47","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"10 1","pages":"72 - 104"},"PeriodicalIF":0.9,"publicationDate":"2021-02-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/2277978721989922","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48919528","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-02-25DOI: 10.1177/2277978720979889
Megha Jain, Aishwarya Nagpal, Abhay Jain
The current study attempts to examine the linkage between government (public) spending and economic growth in the broader framework of selected South Asian Nations (SANs), BRICS and other emerging nations by using two sets of empirical modelling over the period 2007–2016 by using inverted U-shaped hypothesis, propounded by Armey curve (1995). The first set has employed system GMM technique to explore the presence of the Armey curve hypothesis using the square term of government size, while the second set has used the threshold regression using system GMM panel modelling to investigate the subsequent reversals (tipping point). The key findings signify the existence of an inverted U-shaped relationship for the selected data set of emerging nations and, therefore, support the Armey curve hypothesis. The projected threshold (tipping) levels (as a percentage of GDP) are 24.31% for the government total expenditures (GTotExp), 12.92% for consumption spending (GConExp) and 7.11% for investment spending (GInvExp). It has been observed that a rise in the public spending (size) resulted in a substantial increase (decrease) in the growth rate when the public spending was before (after) the optimal threshold level, indicating a non-monotonic association. The findings of the study also suggest a policy implication that public spending could only be a short-term measure to deal with crises in any nation, but not a long-term solution. JEL Classification: C23, C33, E60, E62, H00, H50, O40, O50
{"title":"Government Size and Economic Growth: An Empirical Examination of Selected Emerging Economies","authors":"Megha Jain, Aishwarya Nagpal, Abhay Jain","doi":"10.1177/2277978720979889","DOIUrl":"https://doi.org/10.1177/2277978720979889","url":null,"abstract":"The current study attempts to examine the linkage between government (public) spending and economic growth in the broader framework of selected South Asian Nations (SANs), BRICS and other emerging nations by using two sets of empirical modelling over the period 2007–2016 by using inverted U-shaped hypothesis, propounded by Armey curve (1995). The first set has employed system GMM technique to explore the presence of the Armey curve hypothesis using the square term of government size, while the second set has used the threshold regression using system GMM panel modelling to investigate the subsequent reversals (tipping point). The key findings signify the existence of an inverted U-shaped relationship for the selected data set of emerging nations and, therefore, support the Armey curve hypothesis. The projected threshold (tipping) levels (as a percentage of GDP) are 24.31% for the government total expenditures (GTotExp), 12.92% for consumption spending (GConExp) and 7.11% for investment spending (GInvExp). It has been observed that a rise in the public spending (size) resulted in a substantial increase (decrease) in the growth rate when the public spending was before (after) the optimal threshold level, indicating a non-monotonic association. The findings of the study also suggest a policy implication that public spending could only be a short-term measure to deal with crises in any nation, but not a long-term solution. JEL Classification: C23, C33, E60, E62, H00, H50, O40, O50","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"10 1","pages":"7 - 39"},"PeriodicalIF":0.9,"publicationDate":"2021-02-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/2277978720979889","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47268868","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-02-17DOI: 10.1177/2277978720987341
M. Agarwal, Vandana T. R.
A number of developing countries mainly in Latin America and East Asia suffered exchange rate crises in the 1990s. India also suffered a crisis in 1991 and another earlier in 1966. We examine the run up to the crises in terms of a few macroindicators suggested by various crisis models. We then examine the aftermath of the crisis, which is largely absent in literature. We seek to explain the pre-crisis and post-crisis situations in the light of various crisis models. We find that crises in East Asia cannot be explained in terms of Krugman’s first-generation model (FGM), but those in the other countries can be explained by Krugman’s model, adding to the debates among crises models. JEL Classifications: E420, F310, F320, F410
{"title":"Exchange Rate Crises: Experiences of Latin America, East Asia and India","authors":"M. Agarwal, Vandana T. R.","doi":"10.1177/2277978720987341","DOIUrl":"https://doi.org/10.1177/2277978720987341","url":null,"abstract":"A number of developing countries mainly in Latin America and East Asia suffered exchange rate crises in the 1990s. India also suffered a crisis in 1991 and another earlier in 1966. We examine the run up to the crises in terms of a few macroindicators suggested by various crisis models. We then examine the aftermath of the crisis, which is largely absent in literature. We seek to explain the pre-crisis and post-crisis situations in the light of various crisis models. We find that crises in East Asia cannot be explained in terms of Krugman’s first-generation model (FGM), but those in the other countries can be explained by Krugman’s model, adding to the debates among crises models. JEL Classifications: E420, F310, F320, F410","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"10 1","pages":"158 - 178"},"PeriodicalIF":0.9,"publicationDate":"2021-02-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/2277978720987341","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41632019","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-01-20DOI: 10.1177/2277978720980236
Shrimoyee Ganguly, R. Acharyya
We examine the implications of the emigration of unskilled workers for the quality of a skill-based good exported by a small open economy. This issue is relevant in the context of quality constraints faced by the developing countries like China and India in promoting their exports, on the one hand, and the significantly large emigrations of workers, particularly unskilled workers, which lower their productive capacities, on the other hand. We show that even though unskilled workers are not directly used in the production of quality-differentiated export goods, their emigration would lower export quality when quality upgradation requires more intensive use of skilled workers relative to capital. This result follows from the complementarity between skilled and unskilled wages in a competitive general equilibrium model. A quality-content production subsidy in such a case can mitigate the adverse effects of emigration. The significantly large remittances received from unskilled emigrants create scope for taxing such remittances to finance the subsidy. JEL Classification: F16, F20, F22, F24
{"title":"Emigration, Tax on Remittances and Export Quality","authors":"Shrimoyee Ganguly, R. Acharyya","doi":"10.1177/2277978720980236","DOIUrl":"https://doi.org/10.1177/2277978720980236","url":null,"abstract":"We examine the implications of the emigration of unskilled workers for the quality of a skill-based good exported by a small open economy. This issue is relevant in the context of quality constraints faced by the developing countries like China and India in promoting their exports, on the one hand, and the significantly large emigrations of workers, particularly unskilled workers, which lower their productive capacities, on the other hand. We show that even though unskilled workers are not directly used in the production of quality-differentiated export goods, their emigration would lower export quality when quality upgradation requires more intensive use of skilled workers relative to capital. This result follows from the complementarity between skilled and unskilled wages in a competitive general equilibrium model. A quality-content production subsidy in such a case can mitigate the adverse effects of emigration. The significantly large remittances received from unskilled emigrants create scope for taxing such remittances to finance the subsidy. JEL Classification: F16, F20, F22, F24","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"10 1","pages":"40 - 71"},"PeriodicalIF":0.9,"publicationDate":"2021-01-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/2277978720980236","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49466674","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-01-13DOI: 10.1177/2277978720979888
K. Mughal, F. Schneider, Faheem Aslam, A. Tahir
To demonstrate the impact of informal economy on the official money multiplier in currency supply, we present an extension of the basic money multiplier model. The influence of economic policies may differ if they are based only on official statistics without considering the informal sector. Since most of the activities in informal sector are hidden from authorities, it is widely assumed that these activities are based on cash transactions, a part of total currency that cannot be attracted towards deposits due to the holder’s fear of prosecution and taxation, etc. Therefore, it is expected that such currency holdings can give biased results by playing a role in the money multiplier, a phenomenon that is usually ignored while attempting to alter money supply. The article also indicates that because of informal sector, the currency deposit ratio in the money multiplier is smaller than expected (depending on size of the informal sector), leading to a larger multiplier effect. JEL Classifications: E26, E51, O17
{"title":"Money Multiplier Bias Due to Informal Sector: An Extension of the Existing Money Multiplier","authors":"K. Mughal, F. Schneider, Faheem Aslam, A. Tahir","doi":"10.1177/2277978720979888","DOIUrl":"https://doi.org/10.1177/2277978720979888","url":null,"abstract":"To demonstrate the impact of informal economy on the official money multiplier in currency supply, we present an extension of the basic money multiplier model. The influence of economic policies may differ if they are based only on official statistics without considering the informal sector. Since most of the activities in informal sector are hidden from authorities, it is widely assumed that these activities are based on cash transactions, a part of total currency that cannot be attracted towards deposits due to the holder’s fear of prosecution and taxation, etc. Therefore, it is expected that such currency holdings can give biased results by playing a role in the money multiplier, a phenomenon that is usually ignored while attempting to alter money supply. The article also indicates that because of informal sector, the currency deposit ratio in the money multiplier is smaller than expected (depending on size of the informal sector), leading to a larger multiplier effect. JEL Classifications: E26, E51, O17","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"10 1","pages":"139 - 157"},"PeriodicalIF":0.9,"publicationDate":"2021-01-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/2277978720979888","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47642526","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-12-01DOI: 10.1177/2277978720961190
Saumya Chakrabarti, Vivek Mukherjee
In Indian census, the reclassification of villages as small towns (called census towns) has been startling during the decade 2001–2011 and accounted for almost 30 per cent of urbanization, which is significantly larger than their growth rate in previous decades. Though reclassified as towns, they are governed as rural settlements. This article applies urban economic theory along with rural–urban labour market dynamics to identify the factors behind the birth of census towns. It also attempts to empirically check the validity of some of the hypotheses of the theoretical model it develops by using data from the state of West Bengal during 2001–2011 where the growth rate of census towns had been one of the highest in India. It turns out that the higher formal sector income in the nearby urban centres with lower extent of urban sprawl is the major factor explaining the birth of census towns. JEL Classification: R11, R12, R23
{"title":"Birth of Census Towns in India: An Economic Analysis","authors":"Saumya Chakrabarti, Vivek Mukherjee","doi":"10.1177/2277978720961190","DOIUrl":"https://doi.org/10.1177/2277978720961190","url":null,"abstract":"In Indian census, the reclassification of villages as small towns (called census towns) has been startling during the decade 2001–2011 and accounted for almost 30 per cent of urbanization, which is significantly larger than their growth rate in previous decades. Though reclassified as towns, they are governed as rural settlements. This article applies urban economic theory along with rural–urban labour market dynamics to identify the factors behind the birth of census towns. It also attempts to empirically check the validity of some of the hypotheses of the theoretical model it develops by using data from the state of West Bengal during 2001–2011 where the growth rate of census towns had been one of the highest in India. It turns out that the higher formal sector income in the nearby urban centres with lower extent of urban sprawl is the major factor explaining the birth of census towns. JEL Classification: R11, R12, R23","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"9 1","pages":"139 - 166"},"PeriodicalIF":0.9,"publicationDate":"2020-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/2277978720961190","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46602216","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-12-01DOI: 10.1177/2277978720968416
M. Malik, T. Masood
The objective of this study is to investigate the sources of output growth and their convergence in the Middle East and North African countries over the period 1970–2017. Towards this end, the study employs Levin et al. (2002, Journal of Econometrics, vol. 108, pp. 1–24), Fisher-type (Choi, 2001, Journal of International Money and Finance, vol. 20, pp. 249–272) and Im et al. (2003, Journal of Econometrics, vol. 115, pp. 53–74) panel unit root tests and Pedroni (2004, Econometric Theory, vol. 20, pp. 597–625), Kao (1999, Journal of Econometrics, vol. 90, pp. 1–44) and Johansen–Fisher cointegration tests. After estimating the production function using random effects estimator to obtain the share of physical capital in output, we employed standard growth accounting approach to measure and decompose growth of total output into contributions from growth in physical capital, labour, human capital and total factor productivity (TFP). Further, the study discusses the existence of stochastic and deterministic convergence of real output per worker and its sources (physical capital per worker, human capital and TFP). The statistical results of the article can be summarized as follows: The contribution of physical capital to output growth is found to be positive and higher than the contribution of labour, whereas the contribution of TFP was negative across the region with the exception of Egypt, Morocco, Tunisia and Turkey. However, when the contribution of human capital is netted out, the contribution of TFP becomes negative in all the countries except for Tunisia. In addition, the study found no clear evidence of deterministic convergence in output per worker (but stochastic convergence), human capital and factor productivity. However, the statistical results provide overwhelming evidence for stochastic and deterministic convergence in physical capital per worker. JEL Classification: O4, O40, O47
本研究的目的是调查1970-2017年期间中东和北非国家产出增长的来源及其趋同。为此，本研究采用Levin et al. (2002, Journal of Econometrics, vol. 108, pp. 1-24)、Fisher-type (Choi, 2001, Journal of International monetary and Finance, vol. 20, pp. 249-272)、Im et al. (2003, Journal of Econometrics, vol. 115, pp. 53-74)面板单位根检验、Pedroni (2004, Econometrics Theory, vol. 20, pp. 597-625)、Kao (1999, Journal of Econometrics, vol. 90, pp. 1-44)和Johansen-Fisher协整检验。在使用随机效应估计器估计生产函数以获得物质资本在产出中的份额后，我们采用标准增长会计方法度量和分解总产出增长为物质资本、劳动力、人力资本和全要素生产率(TFP)增长的贡献。此外，研究还讨论了人均实际产出及其来源(人均物质资本、人力资本和TFP)的随机和确定性收敛的存在性。本文的统计结果可以概括如下:物质资本对产出增长的贡献是正的，高于劳动力的贡献，而TFP的贡献在整个地区都是负的，除了埃及、摩洛哥、突尼斯和土耳其。然而，当人力资本的贡献扣除后，除突尼斯外，所有国家的全要素生产率的贡献都变为负值。此外，该研究没有发现人均产出(但随机收敛)、人力资本和要素生产率的确定性收敛的明确证据。然而，统计结果为人均物质资本的随机和确定性趋同提供了压倒性的证据。JEL分类:O4, O40, O47
{"title":"Analysis of Growth Accounting and Convergence in MENA Countries: Panel Cointegration Approach","authors":"M. Malik, T. Masood","doi":"10.1177/2277978720968416","DOIUrl":"https://doi.org/10.1177/2277978720968416","url":null,"abstract":"The objective of this study is to investigate the sources of output growth and their convergence in the Middle East and North African countries over the period 1970–2017. Towards this end, the study employs Levin et al. (2002, Journal of Econometrics, vol. 108, pp. 1–24), Fisher-type (Choi, 2001, Journal of International Money and Finance, vol. 20, pp. 249–272) and Im et al. (2003, Journal of Econometrics, vol. 115, pp. 53–74) panel unit root tests and Pedroni (2004, Econometric Theory, vol. 20, pp. 597–625), Kao (1999, Journal of Econometrics, vol. 90, pp. 1–44) and Johansen–Fisher cointegration tests. After estimating the production function using random effects estimator to obtain the share of physical capital in output, we employed standard growth accounting approach to measure and decompose growth of total output into contributions from growth in physical capital, labour, human capital and total factor productivity (TFP). Further, the study discusses the existence of stochastic and deterministic convergence of real output per worker and its sources (physical capital per worker, human capital and TFP). The statistical results of the article can be summarized as follows: The contribution of physical capital to output growth is found to be positive and higher than the contribution of labour, whereas the contribution of TFP was negative across the region with the exception of Egypt, Morocco, Tunisia and Turkey. However, when the contribution of human capital is netted out, the contribution of TFP becomes negative in all the countries except for Tunisia. In addition, the study found no clear evidence of deterministic convergence in output per worker (but stochastic convergence), human capital and factor productivity. However, the statistical results provide overwhelming evidence for stochastic and deterministic convergence in physical capital per worker. JEL Classification: O4, O40, O47","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"9 1","pages":"237 - 262"},"PeriodicalIF":0.9,"publicationDate":"2020-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/2277978720968416","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47768922","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-12-01DOI: 10.1177/2277978720966485
Shujaat Abbas, S. Wizarat, Sadia Mansoor
This study is an attempt to explore social and economic determinants of external debt distress in five selected South Asian countries, that is, Bangladesh, India, Nepal, Pakistan and Sri Lanka, from 1980 to 2018, by using the contemporary panel fixed effect model and system generalized methods of moments. The findings revealed that the major determinants of external debt distress in selected South Asian countries are large and increasing current account deficits, lower gross capital formation, foreign direct investment and large military expenditures. Among selected socio-economic variables, the increase in life expectancy increases external debt distress, whereas urbanization reduces it considerably. The study urges selected South Asian countries to correct highly unfavourable current account balance, resolve regional conflicts leading to the reduction of the arms race and make the macroeconomic environment friendly for domestic and foreign investment to reduce exploding external debt distress. JEL Classification: C33, E22, F32, H63
{"title":"External Debt Distress in South Asia: Evidence from Panel Data Analysis","authors":"Shujaat Abbas, S. Wizarat, Sadia Mansoor","doi":"10.1177/2277978720966485","DOIUrl":"https://doi.org/10.1177/2277978720966485","url":null,"abstract":"This study is an attempt to explore social and economic determinants of external debt distress in five selected South Asian countries, that is, Bangladesh, India, Nepal, Pakistan and Sri Lanka, from 1980 to 2018, by using the contemporary panel fixed effect model and system generalized methods of moments. The findings revealed that the major determinants of external debt distress in selected South Asian countries are large and increasing current account deficits, lower gross capital formation, foreign direct investment and large military expenditures. Among selected socio-economic variables, the increase in life expectancy increases external debt distress, whereas urbanization reduces it considerably. The study urges selected South Asian countries to correct highly unfavourable current account balance, resolve regional conflicts leading to the reduction of the arms race and make the macroeconomic environment friendly for domestic and foreign investment to reduce exploding external debt distress. JEL Classification: C33, E22, F32, H63","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"9 1","pages":"221 - 236"},"PeriodicalIF":0.9,"publicationDate":"2020-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/2277978720966485","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47785065","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-08-23DOI: 10.1177/2277978720942676
Nusrat Akber, Megha Gupta, K. R. Paltasingh
The purpose of the study is to re-examine the issue of the crowding-in/out effect of public investment on private investment by adopting an improved methodology of the ‘nonlinear autoregressive distributive lag’ (NARDL) model. Taking data from 1970 to 2016, the study finds that public investment crowds-in private investment both in the long-run as well as the short-run. However, the short-run elasticity is statistically more significant and larger in magnitude than the long-run elasticity. It has also been found that macroeconomic uncertainty significantly affects private investment both in the long-run and the short-run. Among other determinants of private investment, we observe foreign direct investment (FDI) inflow, credit flow to the private sector, household savings, real rate of interest and expected output affect private investment significantly. The policy implication of the study calls for the designing of public sector policies that enthuse more private investments. More credit flow to private sectors and FDI in different sectors of the economy should be prioritized. JEL Codes: E22, H54, C32
{"title":"The Crowding-in/ out Debate in Investments in India: Fresh Evidence from NARDL Application","authors":"Nusrat Akber, Megha Gupta, K. R. Paltasingh","doi":"10.1177/2277978720942676","DOIUrl":"https://doi.org/10.1177/2277978720942676","url":null,"abstract":"The purpose of the study is to re-examine the issue of the crowding-in/out effect of public investment on private investment by adopting an improved methodology of the ‘nonlinear autoregressive distributive lag’ (NARDL) model. Taking data from 1970 to 2016, the study finds that public investment crowds-in private investment both in the long-run as well as the short-run. However, the short-run elasticity is statistically more significant and larger in magnitude than the long-run elasticity. It has also been found that macroeconomic uncertainty significantly affects private investment both in the long-run and the short-run. Among other determinants of private investment, we observe foreign direct investment (FDI) inflow, credit flow to the private sector, household savings, real rate of interest and expected output affect private investment significantly. The policy implication of the study calls for the designing of public sector policies that enthuse more private investments. More credit flow to private sectors and FDI in different sectors of the economy should be prioritized. JEL Codes: E22, H54, C32","PeriodicalId":40308,"journal":{"name":"South Asian Journal of Macroeconomics and Public Finance","volume":"9 1","pages":"167 - 189"},"PeriodicalIF":0.9,"publicationDate":"2020-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1177/2277978720942676","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44582142","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-06-01DOI: 10.1177/2277978719875624
O. Ibhagui
China has witnessed remarkable changes in its capital investment and financial system since initiating economic and financial sector reforms more than three decades ago. However, there is a dearth of studies examining what impact these reforms have had on financial intermediation, measured by credit growth, in the country. This article addresses this vacuum and investigates the effect of financial sector and capital investment reforms on credit growth in China between 1986 and 2016. We examine how real interest rate (the financial reform indicator) and gross fixed capital formation (the economic capital investment indicator) are linked with financial intermediation in China. Our empirical results suggest that although gross fixed capital formation positively influences credit growth, there is no evidence that real interest rates influence credit growth in China. The main message is that credit has grown in China, not because of financial intermediation but because of the increased need to finance growing fixed capital investment. JEL Classification: E43, E44, F65
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