Journal of Empirical Studies

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Nexus among Foreign Exchange Reserve, Remittance and Trade Openness: An Empirical Investigation in the Case of Bangladeshi Economy

Pages: 1-12
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Nexus among Foreign Exchange Reserve, Remittance and Trade Openness: An Empirical Investigation in the Case of Bangladeshi Economy

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DOI: 10.18488/journal.66.2021.81.1.12

Abdul Mahidud Khan , Sakib Bin Amin , Adib Ahmed

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Abdul Mahidud Khan , Sakib Bin Amin , Adib Ahmed (2021). Nexus among Foreign Exchange Reserve, Remittance and Trade Openness: An Empirical Investigation in the Case of Bangladeshi Economy. Journal of Empirical Studies, 8(1): 1-12. DOI: 10.18488/journal.66.2021.81.1.12
This study has explored the nexus among foreign exchange reserve, remittance, exchange rate, and trade balance in Bangladesh for the period of 1986 to 2019. By employing the Autoregressive Distributed Lag (ARDL) bound test approach, a long-run equilibrium relationship among the variables has been found. The study has shown a statistically significant positive impact of remittance inflow and trade balance on foreign exchange reserves in the long run. If remittance inflow increases by 1 percent, then the foreign exchange reserve would increase by 0.43 percent, and if trade openness rises by 1 percent, then the foreign exchange reserve would rise by 1.22 percent. Granger causality test has revealed the presence of unidirectional causality from the remittance inflow to foreign exchange reserve and remittance inflow to exchange rate. Bidirectional causality has observed between trade openness and exchange rate; however, no causal relationship exists between reserve and trade openness. Based on the findings, this study has endorsed several policy directions that Bangladesh can take to excel in the 21st century and cope with post-pandemic challenges.
Contribution/ Originality
This study is one of the very few studies which have investigated the foreign reserve dynamics in the context of Bangladesh and the first one to explore the nexus among foreign reserve, remittance, and trade openness by employing the ARDL approach.

Interest Rate–Economic Growth Nexus Under Currency Board Operations

Pages: 13-24
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Interest Rate–Economic Growth Nexus Under Currency Board Operations

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DOI: 10.18488/journal.66.2021.81.13.24

Martinianus Tshimologo Tibinyane , Teresia Kaulihowa

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Martinianus Tshimologo Tibinyane , Teresia Kaulihowa (2021). Interest Rate–Economic Growth Nexus Under Currency Board Operations. Journal of Empirical Studies, 8(1): 13-24. DOI: 10.18488/journal.66.2021.81.13.24
This paper analyses the effect of the prime interest rate as a monetary policy instrument to stimulate economic growth in Namibia, a small open economy that is constrained by currency board operations. A Vector Autoregressive Model (VAR) was used for the period 1980–2019. The result shows that Namibia’s prime interest rate has no significant effect on economic growth. This finding remains robust and consistent when impulse response function and variance decomposition are employed. The impulse response function indicates a shock on the prime interest rate exhibits an inverse relationship. However, this effect is insignificant in both short and long-run scenarios. The variance decomposition indicates that the prime interest rate has a strongly exogenous impact, implying it has a weak influence on GDP growth. Policy implication indicates that small open economies under currency board operations need to identify different policy responses to circumvent external shocks and addresses their development needs.
Contribution/ Originality
This study contributes to existing literature by analysing the effect of the prime interest rate as a monetary policy instrument to stimulate economic growth in Namibia.

Do Petroleum Product Pump Prices Influence Economic Growth in Nigeria? An Empirical Analysis

Pages: 25-35
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Do Petroleum Product Pump Prices Influence Economic Growth in Nigeria? An Empirical Analysis

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DOI: 10.18488/journal.66.2021.81.25.35

Jude Chukwunyere Iwuoha , Florence Chigozirim Awoke , Chiwuike Ubah

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Jude Chukwunyere Iwuoha , Florence Chigozirim Awoke , Chiwuike Ubah (2021). Do Petroleum Product Pump Prices Influence Economic Growth in Nigeria? An Empirical Analysis. Journal of Empirical Studies, 8(1): 25-35. DOI: 10.18488/journal.66.2021.81.25.35
This study examined the impact of fuel pump price adjustment and the causal relationship between fuel pump price adjustments and economic growth in Nigeria using secondary data extracted from the Central Bank of Nigeria annual report and National Bureau of Statistics publications spanning from 1980 - 2019. Descriptive statistics, unit root test, Johansen cointegration test, VECM and Granger causality test were employed to analyse the data. The result showed that a 1% increase in the prices of PMS and AGO increased economic growth by 0.014%, 0.038% and 0.018% respectively while AGO is reduced by 0.002%. Also the prices of PMS, AGO and DPK does not granger cause economic growth in Nigeria within the period under this study meaning that any macroeconomic policy that affects economic growth should be pursued independent of fuel pump prices as any policy aimed at influencing economic growth through pump price adjustments seems to be ineffective.
Contribution/ Originality
This study is one of very few studies which have investigated the impact of fuel price adjustments on Nigeria’s economic growth, with data covering various government regimes up to 2020. The linear model allowed us to introduce an index called index of labour input proxied by exchange rate – EXR.