Reverse Causality between Fiscal and Current Account Deficits in ASEAN: Evidence from Panel Econometric Analysis

Marimuthu, Maran; Khan, Hanana; Bangash, Romana

doi:10.3390/math9101124

Cited by 6 publications

(3 citation statements)

References 43 publications

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“…In this research, the Cumulative Sum (CUSUM) and Cumulative Sum of Squares (CUSUMSQ) tests are employed to examine the stability and consistency of parameters in the model (Marimuthu et al, 2021). The CUSUM and CUSUMQ tests can help to detect the stability of long-term parameters and structural changes in each cross-section along with short-term changes.…”

Section: Stability Testmentioning

confidence: 99%

Does energy transition matter to sustainable development in ASEAN?

Mu'min,

Yaqin,

Anam

2024

Int. J. Renew. Energy Dev.

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The energy transition towards renewable sources represents a pivotal factor in pursuing sustainable development. This study reviews the impact of renewable energy on three aspects of sustainable development, namely economic, social, and environmental aspects in ASEAN. To quantify these aspects, GDP per capita proxies for the economic dimension, unemployment rates for the social dimension, and CO2 emissions for the environmental dimension. The data used is panel data of 10 ASEAN countries from 1996-2020. Pooled Mean Group (PMG) estimation technique is applied to identify the relationship between renewable energy and the dimensions of sustainable development. The study results reveal that renewable energy has a significant influence on sustainable development in the long run. Specifically, renewable energy is able to stimulate GDP per capita levels, thus potentially serving as a determinant of sustainable economic growth in ASEAN. Furthermore, the findings of this study suggest that renewable energy has the capacity to reduce CO2 emissions in the long run. Efforts to increase the share of renewable energy usage are needed to mitigate the risk of environmental degradation. However, it is noteworthy that our study underscores the adverse impact of the energy transition on the social dimension, as it can potentially drive-up unemployment rates in the long run. This impact can be attributed to labor market relocations and structural changes. Novice workers in the renewable energy sector may face the risk of displacement. Consequently, this study has implications that underscore the need for inclusive approaches to elevate the usage of renewable energy. Furthermore, a well-structured policy framework is needed to encourage more investments and prepare the competent workforce in the renewable energy sector.

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Section: Stability Testmentioning

confidence: 99%

Does energy transition matter to sustainable development in ASEAN?

Mu'min,

Yaqin,

Anam

2024

Int. J. Renew. Energy Dev.

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“…However, international aid packages from organizations like the IMF and World Bank provided relief, leading to a surge in the KSE100 index (News Desk, 2020). Pakistan's economic history includes attempts at reform, such as in 1988, aimed at reducing disparities and deficits (Marimuthu et al, 2021). Despite efforts, challenges in implementation persisted, resulting in cycles of poverty and low growth (Furqan & Musa, 2021).…”

Section: Current Stock Market Condition Of Pakistanmentioning

confidence: 99%

Understanding Risk Perception and Investment Decision-Making in the Context of Sustainable Development Goals: A Study of the Pakistan Stock Exchange

Hussain,

ERHUI,

Saif

2024

ABGMCE

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The major purpose of this study is to assess the Impact of Risk Perception on Investment Decision Making in Pakistan Stock Exchange. Furthermore, to get an idea that which variables and processes are more important for the investment decision making in exchange sector of Pakistan. For this research the dependent variable is investment decision making and independent variables are factors (market risk, political risk, and economic risk). This study employed a quantitative research approach, utilizing a questionnaire design to collect information. The questionnaire was structured into five sections. The sampling technique employed was random sampling, and the respondents consisted of working professionals from Islamabad who showed an interest in investments. A total of 250 respondents were contacted for data collection. Statistical analysis was conducted using SPSS software, utilizing descriptive analysis through tables and their corresponding analysis. Additionally, inferential analysis was performed using regression methods to facilitate hypothesis testing. This research finds the Impact of Risk Perception on Investment Decision Making in Pakistan Stock Exchange. The outcome of this journal can be helpful for the investment sector. It elaborates which factors for investment decision making should be focused on more to engage more potential in the stock exchange sector.

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“…Moreover, an increase in government expenditures completely crowds out private investment. Marimuthu et al [29,30] investigated the twin deficit hypothesis in ASEAN-10 by utilizing Panel ARDL, panel cointegration regression (fully modified ordinary least square and dynamic ordinary least square) Dumitrescu and Hurlin (DH) [31] for panel causality. The results indicate that in ASEAN-10 the current account targeting hypothesis is satisfied.…”

Section: Author (Year) Descriptionmentioning

confidence: 99%

Comparative Study on Lower-Middle-, Upper-Middle-, and Higher-Income Economies of ASEAN for Fiscal and Current Account Deficits: A Panel Econometric Analysis

2022

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For the last three decades, ASEAN has been facing a persistent fiscal deficit. However, the impact of fiscal deficit on the current account deficit in the sub-groups of ASEAN is still unknown. This study aims to investigate the impact of fiscal deficit on current account deficit and their relationship among the three sub-groups of ASEAN which are based on gross national income (GNI), i.e., lower-middle-, upper-middle-, and higher-income countries. The analysis covers the panel data collected over the span of the last three decades (1990–2020) for ten Southeast Asian nations (ASEAN). The analyses incorporate the panel methodology for data analysis such as panel unit root for checking data stationarity, cointegration testing, panel autoregressive distributed lag (PARDL) for short- and long-run analysis, cointegration regression (fully modified and dynamic ordinary least squares) for significance, the panel Dumitrescu and Hurlin Granger causality test for examining causal relationships in tested variables, and stability diagnostics and CUMSUM and CUSUMSQ techniques for structural breaks and coefficient stability in the model. In lower-middle-income economies (LMIE), results indicate the existence of a unidirectional causal relationship from the current account deficit (CAD) to the fiscal deficit (FD), suggesting a reverse causal relationship from CAD to FD. In the long run, FD does not significantly induce CAD, while real interest rate (RIR) and exchange rate (EXC) influence CAD. In upper-middle-income economies (UMIE), results specify that there is no causality between FD and CAD. The RIR, EXC, and FD are significant to CAD in the long run. In higher-income economies (HIE), RIR and FD have an influence on CAD in the long run period. Moreover, from CAD to FD, a unidirectional causal association exists, and likewise for LMIE. This is a reverse causal relationship from CAD to the FD, supporting the current account targeting hypothesis (CATH) in both the LMIE and HIE groups. This study recommends that the LMIE and HIE groups can use the fiscal deficit as a tool to eliminate the unfavorable current account position. Policymakers can target EXC and RIR to stabilize CAD in long run. In UMIE and HIE, policymakers must consider FD alarming, as it can induce CAD in the long run. The RIR can be the targeted factor in the sub-groups of ASEAN.

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Reverse Causality between Fiscal and Current Account Deficits in ASEAN: Evidence from Panel Econometric Analysis

Cited by 6 publications

References 43 publications

Does energy transition matter to sustainable development in ASEAN?

Does energy transition matter to sustainable development in ASEAN?

Understanding Risk Perception and Investment Decision-Making in the Context of Sustainable Development Goals: A Study of the Pakistan Stock Exchange

Comparative Study on Lower-Middle-, Upper-Middle-, and Higher-Income Economies of ASEAN for Fiscal and Current Account Deficits: A Panel Econometric Analysis

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