The Risk of Capital Flight on Economic Growth and National Solvency: An Empirical Evidence from Palestine

Abstract

Capital flight is a serious concern and threat to any country's economy, regardless of its level of development, because it represents a squandered investment that lays the way for future problems. The capital flight occurred in Palestine as a result of economic mismanagement, which was worsened by bad policy decisions that robbed the government of much-needed financial resources. This research investigates the consequences of capital flight on Palestinian economic growth. To obtain these results, they used yearly time series data from (1981 to 2021). The Autoregressive Distributed Lag ARDL model is used to investigate the research variables and data gathered from various sources. The findings reveal that factors such as real GDP in Palestine, capital flight, foreign reserves, foreign debt, and domestic investment are all connected in the long and short term. Moreover, the outcomes of various transactions show that capital flight has a negative and significant impact. In contrast, foreign currency reserves, public debt, and direct investment positively influence long-term economic growth. To curb the growing flood of capital flight, the government must implement realistic economic reform programs. These economic improvements must concentrate on these three areas to achieve strong macroeconomic stability, openness and accountability in public finance management and a supportive environment for local production.

The Effects of Monetary Policy on Macroeconomic Variables through Credit and Balance Sheet Channels: A Dynamic Stochastic General Equilibrium Approach

“…It is important to mention that successive economic booms and recessions are the result of using unsustainable economic policies. A country's economy can be called a successful economy when it experiences constant growth rates with a continuous increase in productivity in the long term [1][2][3][4][5][6][7][8][9].…”

Investigating the monetary policy risk channel based on the dynamic stochastic general equilibrium model: Empirical evidence from Iran

“…Considering the growing importance of financial markets both at the national and international levels and the effectiveness of such markets in terms of monetary policies, the effectiveness of monetary policies through its various mechanisms has been researched more than before. For example, the global financial crisis in recent years and the measures taken by the Central Bank of Europe and the United States to solve it, or the use of quantitative easing policies, showed that the importance of monetary policies and its effectiveness on all types of markets and the realization of economic growth and inflation control is undeniable [27][28][29][30][31][32][33]. Secondly, it is necessary to pay attention to the mechanisms and channels of monetary transmission in order to make policies more effective [34][35][36][37][38].…”