Asymmetric Effects of Fiscal Deficit on Inflation: Evidence from India

2021 ◽  
Keyword(s):  
Exchange Rate ◽  
Money Supply ◽  
Policy Implication ◽  
Fiscal Deficit ◽  
Asymmetric Effect ◽  
Asymmetric Effects ◽  
Important Policy ◽  
Lag Model ◽  
Positive Effect ◽  
Important Policy Implication

This study examined the asymmetric effect of fiscal deficit, money supply, and exchange rate on inflation over 1991-2016. The study employed the Non-Linear Autoregressive Distributive Lag Model (NARDL) to achieve the objectives. The results provided evidence in favour of the asymmetric effect. Further, the results showed the positive and negative changes in fiscal deficit on inflation differently. The results also highlighted that the money supply created an inflationary situation more than the fiscal deficit, whereas the exchange rate promoted inflation. So, the policymaker should be much bothered about money supply rather than a fiscal deficit as it has a relatively more positive effect on inflation, it could be an important policy implication of the study

scholarly journals Effectiveness of Monetary Policy in Controlling Inflation in Pakistan

2014 ◽  
Vol 1 (1) ◽  
pp. 10-14
Author(s):  
Muhammad Azhar Khan ◽  
Sonia Haroon
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Money Supply ◽  
Policy Implication ◽  
Financial Institution ◽  
Important Policy ◽  
Long Run ◽  
Effectiveness Of Monetary Policy ◽  
Important Policy Implication

The objective of the study is to examine the role of monetary policy to control inflation and boost economic growth in Pakistan during the period of 1970 to 2010. The results show that there is a long-run equilibrium among inflation, money supply and GDP. In addition, the results indicate that monetary policy is a powerful tool in order to control inflation in Pakistan. The important policy implication is that inflation in Pakistan can be cured by sufficiently tight monetary policy coupled with low scale borrowing by government from financial institution. At the same time economic growth requires to be sustained.

scholarly journals EFECT OF FOREIGN EXCHANGE RATE FLUCTUATIONS ON NIGERIAN ECONOMY

10.26458/1814 ◽  
2018 ◽  
Vol 18 (1) ◽  
pp. 105-122
Author(s):  
Lawrence Olisaemeka UFOEZE ◽  
Camilus OKUMA, N. ◽  
Clem NWAKOBY ◽  
Udoka Bernard Alajekwu
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Money Supply ◽  
Significant Positive Effect ◽  
Exchange Rate Fluctuations ◽  
Fixed Exchange Rate ◽  
Oil Revenue ◽  
Time Period ◽  
Negative Effect ◽  
Positive Effect

This study investigated the effect of exchange rate fluctuations on Nigerian economy. The fixed and floating exchange eras were compared to know the exchange rate system in which the economy has fairly better. The time period covered was 1970 to 2012. The study employed the ordinary least square (OLS) multiple regression technique for the analysis. The coefficient of determination (R2), F-test, t-test, beta and Durbin-Watson were used in the interpretation of the results. The resulted revealed that about 85% of the changes in macroeconomic indicators are explained in the fixed exchange era. In the floating exchange era, 99% was explained while the whole periods has 73% explanatory power, hence the floating exchange era (1986 to date) is more effective in explaining economic trend in Nigeria. Also, exchange rate has significant positive effect on GDP during the fixed exchange rate era and negative effect the eras floating and all-time; inflation has insignificant negative effect on GDP during the fixed exchange era; significant effect in floating era and significant negative effect in the all-time period; money supply has insignificant negative effect GDP in fixed exchange era; and significant positive effect during the floating and all-time period; and oil revenue has significant positive effect on the GDP in all the exchange rate regimes (floating, fixed and all-time) in Nigeria.  The study thus conclude that exchange rate movement is a good indicator for monitoring Nigerian economic growth. So far exchange rate has always been a key economic indicator for Nigeria. The floating exchange period has outperformed the fixed exchange rate in terms of contribution inflation, money supply and oil revenue to economic growth. This indicate that the floating exchange rate has been a better economic regime for sustainable economic growth in Nigeria. From the findings, it is evident that oil revenue has positive effect in Nigeria and has remained the mainstay of the economy. It is thus recommended among other things that a positive exchange rate stock should be monitored regularly, so as not to allow those that find exchange rate as an avenue of investment like banks and public carry out their business, which is more devastating to the economy. 

Exchange Rate Volatility and Tourism Demand in India: Unraveling the Asymmetric Relationship

2019 ◽  
Vol 59 (7) ◽  
pp. 1282-1297 ◽  
Author(s):  
Chandan Sharma ◽  
Debdatta Pal
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Volatility ◽  
Point Of View ◽  
Tourism Demand ◽  
Asymmetric Effect ◽  
Distributed Lag ◽  
Distributed Lag Model ◽  
Long Run ◽  
Short Run ◽  
Lag Model

This study explores the asymmetric effect of exchange rate volatility on tourism demand in India from January 2006 to April 2018. Tourism demand is captured from a twin perspective—quantity and value. While quantity is represented by foreign tourist arrival in India, earnings from foreign tourists are used to represent value. The study is unique from a methodological point of view as it makes the first ever application of the nonlinear autoregressive distributed lag model of Shin, Yu, and Greenwood-Nimmo (2014), in the tourism demand literature to capture nonlinearity simultaneously in the short- as well as long-run. Results of our analysis show that tourism demand in India responds asymmetrically to both nominal and real exchange rate volatility. Also, the long-run effects of exchange rate uncertainty are shown to be more damaging than the short-run effects. Our findings are fairly robust to alternative specifications.

scholarly journals VARIABEL EKONOMI MONETER YANG MEMPENGARUHI PERTUMBUHAN EKONOMI DAN FINANCIAL INCLUSION BANK SYARIAH DI INDONESIA PERIODE 2010-2017

2020 ◽  
Vol 6 (7) ◽  
pp. 1395
Author(s):  
Kholifatun Nahdliyah ◽  
Atina Shofawati
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Money Supply ◽  
Latent Variables ◽  
Partial Least Square ◽  
Financial Inclusion ◽  
Series Data ◽  
Research Approach ◽  
Significant Positive Effect ◽  
Positive Effect

This study aims to determine the effect of exchange rate and money supply on economic growth and financial inclusion in Bank Syariah Period 2010-2017. The sample used is saturated samples, ie all parts of Sharia Bank, including Sharia Commercial Bank and Sharia Business Unit which in the last year of 2017 amounted to 13 Sharia Commercial Banks and 21 Sharia Business Units, furthermore this research uses time series data analysis by analyzing data from year to year. The research approach used is quantitative approach using analysis technique PLS (Partial Least Square) with four latent variables namely exchange rate and money supply as exogenous variable, economic growth as endogen intervention variable, and financial inclusion as endogen variable. The results of this study indicate: the exchange rate has a significant negative effect on economic growth, the money supply has a significant positive effect on economic growth, economic growth has a significant positive effect on financial inclusion of Sharia Bank.Keywords: exchange rate, money supply, economic growth, and financial inclusion

scholarly journals Microfinance and Inequality: Case of Indonesia

2020 ◽  
Vol 4 (3) ◽  
pp. 211
Author(s):  
Leo Indra Wardhana ◽  
Fani Pramuditya ◽  
Elton Buyung Satriyanto
Keyword(s):  
Panel Data ◽  
Income Inequality ◽  
Policy Implication ◽  
Geographical Area ◽  
Important Policy ◽  
Province Level ◽  
Important Policy Implication

This study investigates the role of microfinance from small-sized banks, usually with a limited geographical area of operation, in Indonesia, namely Bank Perkreditan Rakyat (BPR) on the income inequality. Using a province level panel data of 2012-2018 the results show that loans from such a bank are associated with income inequality reduction, supporting the arguments that microfinance contributes to income inequality reduction. This study has an important policy implication regarding the existence of BPR in Indonesia.

scholarly journals EFFECT OF MONETARY POLICY ON ECONOMIC GROWTH IN NIGERIA: AN EMPIRICAL INVESTIGATION

10.26458/1815 ◽  
2018 ◽  
Vol 18 (1) ◽  
pp. 123-140 ◽  
Author(s):  
Lawrence Olisaemeka UFOEZE ◽  
J. C ODIMGBE ◽  
V. N. EZEABALISI ◽  
Udoka Bernard ALAJEKWU
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rate ◽  
Money Supply ◽  
Time Series Data ◽  
Series Data ◽  
Long Run ◽  
Effect Of Monetary Policy ◽  
Positive Effect

The study investigated effect of monetary policy on economic growth in Nigeria. The natural log of the GDP was used as the dependent variables against the explanatory monetary policy variables: monetary policy rate, money supply, exchange rate, lending rate and investment. The time series data is the market controlled period covering 1986 to 2016. The study adopted an Ordinary Least Squared technique and also conducted the unit root and co-integration tests. The study showed that long run relationship exists among the variables. Also, the core finding of this study showed that monetary policy rate, interest rate, and investment have insignificant positive effect on economic growth in Nigeria. Money supply however has significant positive effect on growth in Nigeria. Exchange rate has significant negative effect on GDP in Nigeria. Money supply and investment granger cause economic growth, while economic growth causes interest rate in Nigeria. On the overall, monetary policy explain 98% of the changes in economic growth in Nigeria. Thus, the study concluded that monetary policy can be effectively used to control Nigerian economy and thus a veritable tool for price stability and improve output.

scholarly journals ANALISIS PENGARUH JUMLAH UANG BEREDAR (M1), SUKU BUNGA SBI, NILAI TUKAR SUKU BUNGA DEPOSITO TERHADAP TINGKAT INFLASI

Media Ekonomi ◽  
2017 ◽  
Vol 19 (3) ◽  
pp. 43
Author(s):  
Fadli Ferdiansyah
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Linear Regression ◽  
Interest Rates ◽  
Money Supply ◽  
Significant Positive Effect ◽  
Significant Negative Effect ◽  
Negative Effect ◽  
Positive Effect

<p>Inflation is one of the effects of a prolonged economic crisis that hit the country. Inflation is a situation where there is an increase in general prices which continuesover the  long term. The purpose of this study was to determine the effect of the money supply, interrst rate, deposit interest rate and exchange rate (Rp/USD) of the inflation in 2006 – 2011.6 The result of this study suges that the suppy of money have no significant positive effect on inflation. SBI rate have positive and significant effect on inflation. Deposit have rate and no significant negative effect on inflation. Exchange Rate have no significant negative effect on inflation.</p><p>Keywords : Money Supply, Interest Rates, Deposit Interest Rates, Exchange Rate    (IDR /USD), Multiple  Linear Regression, Inflation</p>

scholarly journals Kenaikan Utang Luar Negeri Dalam Sistem Ekonomi Makro Modern

2020 ◽  
Vol 8 (3) ◽  
pp. 371-378
Author(s):  
Airin Nuraini ◽  
Abdul Roup
Keyword(s):  
Exchange Rate ◽  
Money Supply ◽  
Third World ◽  
Goodness Of Fit ◽  
Foreign Debt ◽  
Fiscal Deficit ◽  
Macroeconomic Conditions ◽  
Economic Problems ◽  
Independent Variables ◽  
The Difference

The macroeconomic conditions in Indonesia and other third world countries have never been separated from economic problems, one of which is high foreign debt. This is indicated because of the vicious cycle that occurs in the modern macroeconomic system (Nuraini, 2020), namely if the monetary sector is larger than the real sector or an increase in the money supply occurs, inflation or economic bubbles will occur, the way to overcome this is with a contraction policy to reduce the amount. money supply, and later the economy will slow down, if the economy slows down, it will be overcome by expansion policies to increase the money supply, one of which is a fiscal deficit policy, a fiscal deficit policy means that expenditure is greater than income, the difference will be financed the largest by debt so that debt will always be experiencing an increase, the form of foreign debt which refers to the dollar exchange rate will ultimately make the amount of debt and interest bigger and continue to increase and so turn in the circle. The purpose of this study is to empirically determine the effect of the fiscal deficit policy, the money supply, the foreign debt of the previous period, and the exchange rate (USD exchange rate) on the increase in External Debt (ULN), especially in Indonesia in the vulnerable period of 1989 to 2018. The result is that all independent variables have a significant and significant effect on foreign debt with a Goodness of fit of 97.57%

ASYMMETRIC EFFECTS OF EXCHANGE RATE VOLATILITY ON BILATERAL TRADE BETWEEN TAIWAN AND INDONESIA

2020 ◽  
Vol 65 (04) ◽  
pp. 857-888
Author(s):  
MEI-SE CHIEN ◽  
NUR SETYOWATI ◽  
CHIH-YANG CHENG
Keyword(s):  
Exchange Rate ◽  
Bilateral Trade ◽  
Exchange Rate Volatility ◽  
Asymmetric Effect ◽  
Ardl Model ◽  
Asymmetric Effects ◽  
Long Run ◽  
Short Run

This paper investigates the effect of exchange rate volatility on bilateral trade between Taiwan and Indonesia via 19 export and import industries. Considering the existence of an asymmetric effect of exchange rate volatility on trade, we employ an asymmetric ARDL model and arrive at the following main results. First, the long-run asymmetric effect of exchange rate volatility shows far higher impacts on Taiwan’s exports to Indonesia than on Taiwan’s imports from Indonesia. Second, the short-run asymmetric effect of exchange rate volatility causes unstable changes on the trade amounts for most of Taiwan’s export and import industries with Indonesia.

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