scholarly journals Disaster, Aid, and Preferences: The Long-run Impact of the Tsunami on Giving in Sri Lanka

2017 ◽  
Vol 94 ◽  
pp. 157-173 ◽  
Author(s):  
Leonardo Becchetti ◽  
Stefano Castriota ◽  
Pierluigi Conzo
Keyword(s):  
Sri Lanka ◽  
Long Run ◽  
Disaster Aid

scholarly journals Do Military Expenditure and Conflict Affect Economic Growth in Sri Lanka? Evidence from the ARDL Bounds Test Approach

2016 ◽  
Vol 8 (3) ◽  
pp. 1
Author(s):  
Abdul Rasheed Sithy Jesmy ◽  
Mohd Zaini Abd Karim ◽  
Shri Dewi Applanaidu
Keyword(s):  
Growth Rate ◽  
Civil War ◽  
Sri Lanka ◽  
Military Expenditure ◽  
Gdp Growth ◽  
Per Capita Gdp ◽  
Long Run ◽  
Gdp Growth Rate ◽  
Per Capita ◽  
Bounds Test

Conflicts in the form of civil war, ethnic tensions and political discord are of enduring concern and a major bottleneck to economic development in Sri Lanka. Three decades of civil war and unethical political culture have caused severe economic problems for the country, including slower rate of growth and a huge defence expenditure. The aim of this study is to examine the effect of military expenditure and conflict on per capita GDP growth rate in Sri Lanka from 1973 to 2014 using the Solow growth model and ARDL bounds test approach. The results of the bounds test are highly significant and lead to cointegration. The negative and significant coefficients of the error correction term illustrate the expected convergence process in the long-run dynamic of per capita GDP. The estimated empirical results show that, the coefficients of military expenditure and conflict are negative and statistically significant in the short-run as well as in the long-run in determining per capita GDP growth rate in Sri Lanka. Hence, it is critically important to take necessary action to decrease military expenditure and provide an efficient political solution to the problem of minorities, specifically in the post-war period.

Does Financial Liberalization and Trade Openness Promote Growth in South Asia?

2010 ◽  
pp. 101-132
Author(s):  
Muhammad Arshad Kahn
Keyword(s):  
Economic Growth ◽  
Sri Lanka ◽  
Trade Liberalization ◽  
Inflation Rate ◽  
Financial Liberalization ◽  
Trade Openness ◽  
Real Output ◽  
Domestic Investment ◽  
Long Run ◽  
Short Run

This chapter examines the hypotheses that trade liberalization and financial liberalization jointly enhances economic growth in the four South Asian countries including Bangladesh, India, Pakistan and Sri Lanka for the period 1970-2007 using bounds testing approach to cointegration. The results suggest that in the long-run except for Bangladesh, financial development plays no role in promoting economic growth in these countries. Furthermore, the results suggest that trade openness plays a significant role in promoting economic growth in Bangladesh and India, while exerts negative effect on Pakistan and no effect on Sri Lanka. The share of domestic investment influences real output significantly in Bangladesh, India and Pakistan. In the long- as well as short-run two-way causality between real output, trade openness, share of investment and inflation rate exists for the case of Bangladesh and India. For the case of India two-way causality between finance and growth exists in the short-run. For the case of Pakistan, there is an evidence of long-run causality between real output, finance, trade openness, share of investment and inflation rate. However, in the short-run, two-way causality between real output, trade openness and share of investment is existed and one-way causality between inflation rate, trade openness and share of investment is also observed. No evidence of short-run causality between finance and growth and vice versa for Pakistan has been seen. Finally, for Sri Lanka, an evidence of long-run causality between real output, finance, trade openness and investment share has been found. In the short-run one-way causality between finance-growth, trade-finance, trade-growth and trade-investment has been obtained. These mixed results suggest that the authorities may focuses more and more on the trade liberalization. In addition, there is a need to further deepen the banking and stock markets and provide investment friendly environment to enhance domestic investment which, in turn, promotes economic growth.

Re-examining the twin deficit hypothesis for major South Asian economies

2019 ◽  
Vol 12 (3) ◽  
pp. 265-287
Author(s):  
Shruti Shastri
Keyword(s):  
Time Series ◽  
Exchange Rate ◽  
Interest Rate ◽  
Sri Lanka ◽  
South Asian ◽  
Current Account ◽  
Transmission Mechanism ◽  
Asian Countries ◽  
Content Type ◽  
Long Run

Purpose The purpose of this study is to revisit the twin deficit hypothesis (TDH) and provide insights into the transmission mechanism connecting budget deficits and current account deficits for five major South Asian countries, namely, India, Bangladesh, Pakistan Sri Lanka and Nepal for the period 1985-2016. Design/methodology/approach This study uses a multivariate framework including real interest rate, real exchange rate and real gross domestic product to avoid the possibility of incorrect inferences caused by omission of relevant mediating variables. The long-run relationship and causality are investigated through the autoregressive distributed lag bounds testing approach and Toda Yamamoto approach, respectively, for each individual country. The robustness of the results is assessed with the help of Westerlund’s cointegration test and group mean fully modified ordinary least squares (GM-FMOLS), group mean dynamic ordinary least square (GM-DOLS) and common correlated effect mean group (CCEMG) estimators in the panel framework. Findings Both time series and panel evidences indicate long-run relationship between budget balance (BB) and current account balance (CAB) together with the mediating variables. The results indicate bi-directional causation between the two balances for India and Bangladesh, TDH for Pakistan and Sri Lanka and the reverse causation from CAB to BB for Nepal. Regarding the transmission mechanism, the results indicate the absence of the causal chain postulated by Mundell–Fleming, which predicts that BB causes CAB via interest rate and exchange rate. A CCEMG estimate of the import demand function reveals a positive government spending elasticity of imports suggesting that BB affects CAB by direct impact through demand. Originality/value This study augments the twin deficit literature on South Asian countries by providing insights into the transmission mechanism connecting the BB and CAB. Moreover, the study provides robust evidences on the TDH by using both time series and panel data techniques.

Do Governance Indicators Matter for Economic Growth? The Case of Sri Lanka

2019 ◽  
Vol 65 (2) ◽  
pp. 430-450
Author(s):  
T. Vinayagathasan ◽  
R. Ramesh
Keyword(s):  
Economic Growth ◽  
Sri Lanka ◽  
Political Stability ◽  
Estimation Methods ◽  
Series Data ◽  
Scatter Plot ◽  
Correlation Test ◽  
Governance Indicators ◽  
Long Run ◽  
Traditional Approaches

This study attempts to identify the impact of governance indicators on economic growth using time series data for Sri Lanka from 1996 to 2016 published by the World Bank. The Phillips–Perron (PP) unit root test confirmed that all the variables are integrated in order one and suggested the use of cointegration technique to identify the long-run relationship between the variables. All the lag length selection criteria except Schwarz Information Criterion (SIC) advocated the use of one lag as an optimal lag length for this study. Johansen cointegration method detected three cointegrating relationships among the variables. Further, this technique identified a significant and positive relationship between government effectiveness (GE) and gross domestic product per capita (GDPPC) in the long run. This result is in contrast to all the three traditional approaches, such as correlation test, scatter plot and ordinary least squared (OLS), in which they do not identify any clear relationship between them. Moreover, Johansen test found a negative and statistically significant link between political stability and absence of violence (PSAV) and GDPPC in the long run, while all three traditional approaches identified a positive correlation between them. The findings of this study indicate a negative association between rule of law (ROL) and GDPPC in the long run, which coincides with theory, some of the empirical studies and with findings of all three traditional approaches used in this study. Even though OLS did not identify a significant relationship between control of corruption (COC) and GDPPC, Johansen test, correlation test and scatter plot detected a significant and negative correlation between them in the long run as expected by the theoretical evidence. Granger’s causality test identified the bidirectional causality between GE and ROL and unidirectional causality between ROL and COC. However, relationship between governance variables and GDPPC vary based on the estimation methods. These findings suggest that the policymakers need to take considerable attention on the above when they formulate and implement policy to improve GE.

scholarly journals Wagner's Law in Sri Lanka: An Econometric Analysis

2012 ◽  
Vol 2012 ◽  
pp. 1-8 ◽  
Author(s):  
Mayandy Kesavarajah
Keyword(s):  
Economic Growth ◽  
Sri Lanka ◽  
Empirical Evidence ◽  
Public Expenditure ◽  
Special Focus ◽  
Annual Data ◽  
Sri Lankan ◽  
Wagner’S Law ◽  
Long Run ◽  
Wagner's Law

This study examines whether there is empirical evidence that Wagner's law holds in the Sri Lankan economy using time series annual data over the period from 1960 to 2010 for Sri Lanka, applying cointegration and error correction modeling (ECM) techniques. In particular, this study keeps a special focus to examine the validity of six versions of Wagner's hypothesis, which support the existence of long-run relationship between public expenditure and economic growth. The empirical evidence of this study indicates that while there prevail is a short-run relationship between public expenditure and economic growth, the long-run results showed no strong evidence in support of the validity of the Wagner’s law for Sri Lankan economy. Granger causality analysis also confirms this result. Therefore, the findings of this study pave to broaden this study further for a deeper understanding about the relationship between public expenditure and economic growth by giving more attention on individual items of public expenditure and by including more macroeconomic variables in the econometric model using different methodology in future.

The short-run and long-run dynamics among FDI, trade openness and economic growth: using a bootstrap ARDL test for co-integration in selected South Asian countries

2020 ◽  
Vol 9 (2) ◽  
pp. 279-295 ◽  
Author(s):  
Hummera Saleem ◽  
Malik Shahzad Shabbir ◽  
Muhammad Bilal khan
Keyword(s):  
Economic Growth ◽  
Sri Lanka ◽  
Causal Relationship ◽  
South Asian ◽  
Trade Openness ◽  
Asian Countries ◽  
Content Type ◽  
Long Run ◽  
Short Run ◽  
Auto Regressive

PurposeThe purpose of this study is to analyze the dynamic causal relationship between foreign direct investment (FDI), gross domestic product (GDP) and trade openness (TO) on a set of five selected South Asian countries.Design/methodology/approachThis study used newly developed bootstrap auto regressive distributed lags (ARDL) cointegration test to examine the long-run relationship among FDI, GDP and TO for selected South Asian countries for 1975–2016.FindingsThe economic growth (EG) is significantly related to TO for Bangladesh, India and Sri Lanka and the expansion of TO is crucial for growth in these countries. The results show that all countries (except Bangladesh) found the existence of long-run cointegration between FDI, GDP and TO, whereas FDI is a dependent variable. These results concluded that FDI and TO are contributing to EG in these selected countries.Originality/valueThis study is one of the first attempts to investigate the causal relationship and address the short and long dynamic among FDI, GDP and TO regarding five south Asian countries such as Bangladesh, India, Nepal, Pakistan and Sri Lanka.

LONG-RUN RELATIONSHIP BETWEEN IMPORTS AND EXPORTS: EVIDENCE FROM ASIAN COUNTRIES

2008 ◽  
Vol 53 (02) ◽  
pp. 261-278
Author(s):  
MOHAMMAD AFZAL
Keyword(s):  
Sri Lanka ◽  
Error Correction ◽  
Graphical Analysis ◽  
Budget Constraint ◽  
Cointegration Test ◽  
Asian Countries ◽  
Differential Impact ◽  
Macroeconomic Policies ◽  
Long Run ◽  
Short Run

We used Engle–Granger cointegration test to investigate and compare the long-run performance of imports and exports in Pakistan, India, Sri Lanka, Korea and Thailand. Graphical analysis demonstrates an inherent tendency of imports and exports to move together in the long run. Cointegration and error correction results support the graphical analysis that these countries do not violate on the average the international budget constraint, and trade disequilibrium is a short-run phenomenon that is sustainable in the long run. Macroeconomic policies in the sample countries have been adequately effective to affect long-run equilibrium between imports and exports. The international events had differential impact on each country of our sample.

scholarly journals The Relationship between Electric Power Consumption, Foreign Direct Investment and Economic Growth in Sri Lanka

2020 ◽  
pp. 21-31
Author(s):  
S. Maheswaranathan
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Sri Lanka ◽  
Direct Investment ◽  
Time Series Data ◽  
Empirical Finding ◽  
Electricity Consumption ◽  
Series Data ◽  
Long Run ◽  
Bound Test

Purpose: This paper investigates the long run relationship between electricity consumption, foreign direct investment and economic growth in Sri Lanka. Design/Methodology/Approach: The annual time series data over the period 1970–2017 is considered to this study. Augmented Dickey–Fuller (ADF) unit root analysis is employed for examining the stationary properties of the variables. Consequently, Autoregressive Distributed Lag (ARDL) analysis is employed to examining the short- run and long-run relationship between electricity consumption, foreign direct investment and economic growth in Sri Lanka. Further, this study used the diagnostic tests such as the residual normality test, heteroskedasticity and serial autocorrelation tests for misspecification to validate the parameter estimation outcomes achieved by the estimated model. CUSUM test is applied to test the stability of the model. Collected data were analyzed using STATA version 15. Findings: The findings of the bound test confirm that the variables are cointegrated. Further the results reveal that there is a statistically positive significant relationship between electricity consumption, foreign direct investment and economic growth in Sri Lanka in the long run and short term. The empirical finding reveals that one percent increase in electricity consumption and foreign direct investment increases the GDP by 1.5 percent and 12.9 percent in the long run respectively.

scholarly journals Tea export competitiveness and the nexus between tea export and economic growth: The cases of Bangladesh, India and Sri Lanka

2021 ◽  
Vol 123 (2) ◽  
pp. 76-85
Author(s):  
Md. Sayemul Islam ◽  
Nishat Sultana Ema ◽  
Sudipto Chakrobortty ◽  
Hasneen Jahan ◽  
Md. Emran Hossain
Keyword(s):  
Economic Growth ◽  
Sri Lanka ◽  
Foreign Currency ◽  
Impulse Response Function ◽  
British India ◽  
Long Run ◽  
Export Competitiveness ◽  
Short Run ◽  
Johansen Cointegration Test ◽  
Test Outcomes

Tea export competitiveness and the nexus between tea export and economic growth: The cases of Bangladesh, India and Sri Lanka Long since the end of the British India regime, Bangladesh, India, and Sri Lanka have produced a signifi cant volume of tea which continues to bring them invaluable foreign currency earnings through exports. Our paper explores the tea export competitiveness of these countries by employing the Revealed Symmetric Comparative Advantage (RSCA) index, and analyses the nexus between tea export and economic growth over the period from 1980 to 2018 using several dynamic econometric approaches. Results suggest that Bangladesh has lost its tea export competitiveness over the last decade. India posted moderate performance, while Sri Lanka consistently kept its dominant position. Further, the Johansen Cointegration test outcomes report no long-run relationship between tea export and economic growth across all the countries. The Granger Causality outcomes illustrate that only in Sri Lanka is it the case that tea export causes short-run economic growth. Lastly, the impulse response function projects tea export and economic growth, taking into consideration the response of each to a shock from the other. Extrapolation from the results indicate that, in contrast to the cases of Bangladesh and India (where no direct relationship was found), tea export and economic growth are intimately interconnected in Sri Lanka. This article further recommends eff ective policies so that economic growth in these countries can remain steady and that their tea industries can thrive.

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