Economics

This paper investigates both the behavior and determinants of inflation in Albania employing three different approaches. The first approach decomposes inflation into four components: seasonal, cyclical, trend, and random. The second approach relies on the widely employed Granger-causality test by using disaggregated data on both the consumer price index (CPI) and the key economic variables. Finally, the third approach applies co-integration and error-correction techniques to the inflation process --a process outlined by a simple theoretical model.

The President of Kenya, in January 2014, announced that infrastructure development would be used as the major drive to achieve economic growth during the tenure of his presidency. A notable part of the statement by the President is the requirement that the policy would involve very significant public expenditure on infrastructure. In that context, this study undertook a causality analysis between infrastructure expenditure and economic growth and labor was introduced into the framework as a control variable. The study also undertook to establish if innovations in one variable would influence the future behavior of another. Annual data used in this study was obtained from World Development Indicators for the period 1980 to 2013. Using Granger Causality approach the study reveals that: there is bidirectional flow of causality between economic growth and infrastructure, shocks in economic growth explained the behavior of infrastructure even beyond eight years, and that infrastructure expenditure is explained by innovations in the previous period. The findings suggest that the government should commit more funds towards developing infrastructure in the short term. This should be complemented by improving the quality of institutions and an improvement in the level of regulation to enhance sustainable growth.

This paper explores the inter-connectedness of remittances and financial development and how their associated covariates such as savings, investment, money supply and economic growth are impacted by this relationship. The study employs a panel vector autoregression (P-VAR) estimation technique, and the generalized methods of moments (GMM) are applied after removing fixed effects and lagged regressors are used as instruments to have consistent estimators. The main findings of the study demonstrate that (i) remittances and financial development have a feedback interrelationship, and some interlinkages are identified amongst their covariates, (ii) economic growth has a dual connection with financial development and that (iii) savings, investment, and broad money supply influence both financial development and remittances. These findings contribute to current discussions in the literature as they support the importance of deepening financial markets in SSA, and attracting more remittanc...

The study examines the role of tourism as a potential driver of economic growth in a middle-income economy. Specifically, the study analyzes the short run relationship between economic growth and tourist expenditures using annual time series data from 1980 to 2015. The study is motivated by the fact that tourism is being given priority in devising strategies for rural and national development. Botswana has enjoyed economic growth since independence at an annual average of 9, which is considered one of the fastest in the world. Though mining revenues have been given the credit for the development of the economy, it is also important to realize the contribution of other important sectors like tourism in the context of an emerging economy. Using the vector auto regression approach, the study supports unidirectional causality moving from tourist expenditures to growth. Findings show that growth responds immediately to shocks in tourist expenditures up to six periods. However, tourism expenditures are not a key driver of growth and their effect on growth face diminishing returns. Demand side policies should focus on reducing inflationary pressures, which improves demand for products by tourists and increases growth. Supply side policies should focus on providing adequate finances to tour operators and tax incentives. These can improve the level of innovation and infrastructure development that are important in extending the impact of tourist expenditure on growth beyond six periods. They will also improve the contribution by fdi inflows in improving tourist expenditures.

Historically, aid flows from the developed to developing countries have been economically justified for reducing poverty either through directly targeting the poor or indirectly via economic growth. This present study investigates whether or not aid has produced the anticipated results in 12 selected SADC countries using panel data analysis covering a period of nine years (2005-2013). The variable of choice for measuring aid effectiveness in reducing poverty in this present study is the human development index (HDI), a non-monetary poverty measure. Overally, the study finds that aid has a negative and no significant impact on poverty reduction, supporting the works of the public choice hypothesis. The negative and insignificant results could be explained by aid misallocation, misuse and lack of absorptive capacity by recipient countries.  Secondly for the analysis of how aid can be made more effective in reducing poverty, empirical evidence suggests that institutional quality, control of corruption and trade openness are vital for aid effectiveness. Economic growth and trade openness have been found to be necessary conditions for poverty reduction.

The study applied the ordinary least squares (OLS) technique on quarterly time-series data to analyze if remittances can boost tax revenue in Zimbabwe. The main challenge faced in Zimbabwe is the insufficient tax revenues to finance growing public spending needs. Results indicate that the share of remittances both in the current and lagged period significantly influenced income tax revenue and the volume of manufacturing. Trade openness was found to be insignificant. Similar results were also observed for the variables when value-added tax to total revenue was the dependent variable. When lagged variables were taken into account, results showedthat only remittances were significant. Thus, increased remittance inflows have significant potential to generate more taxes for the government through income and consumption taxes. The study recommends the creation of platforms, which stimulate and attract more remittances, such as reducing costs of sending remittances through formal channels...

The aim of the study is to investigate the relationship between budget deficit, money growth and inflation in Zimbabwe for the period 1980-2007. This study stands as a basis of building blocks for future policy analysis by reflecting errors of the past. The study employs Vector Auto Regression (VAR) model coupled with variance decomposition and impulse response functions to analyze the relationship. Before estimation is done the variables are tested for unit root using the Augmented Dickey-Fuller (ADF) test. The ADF test results reveal that budget deficit is integrated of order one whilst money supply growth and inflation are integrated of order two. The regression results reveal that there is a positive relationship between budget deficit and money growth and also a positive relationship between money growth and inflation. This supports the Sargent and Wallace (1981) hypothesis. The policy recommendations comprise of elements of both the fiscal policy and the monetary policy. The f...

The study applied the ordinary least squares (OLS) technique on quarterly time-series data to analyze if remittances can boost tax revenue in Zimbabwe. The main challenge faced in Zimbabwe is the insufficient tax revenues to finance growing public spending needs. Results indicate that the share of remittances both in the current and lagged period significantly influenced income tax revenue and the volume of manufacturing. Trade openness was found to be insignificant. Similar results were also observed for the variables when value-added tax to total revenue was the dependent variable. When lagged variables were taken into account, results showed that only remittances were significant. Thus, increased remittance inflows have significant potential to generate more taxes for the government through income and consumption taxes. The study recommends the creation of platforms, which stimulate and attract more remittances, such as reducing costs of sending remittances through formal channels. Secondly, good governance and quality institutions provide appropriate economic environment and growth policies. Economic growth fosters increased and sustainable tax due to an increased tax base.

The aim of the study is to investigate the relationship between budget deficit, money growth and inflation in Zimbabwe for the period 1980-2007. This study stands as a basis of building blocks for future policy analysis by reflecting errors of the past. The study employs Vector Auto Regression (VAR) model coupled with variance decomposition and impulse response functions to analyze the relationship. Before estimation is done the variables are tested for unit root using the Augmented Dickey-Fuller (ADF) test. The ADF test results reveal that budget deficit is integrated of order one whilst money supply growth and inflation are integrated of order two. The regression results reveal that there is a positive relationship between budget deficit and money growth and also a positive relationship between money growth and inflation. This supports the Sargent and Wallace (1981) hypothesis. The policy recommendations comprise of elements of both the fiscal policy and the monetary policy. The fiscal authorities should strengthen fiscal framework, display a high sense of transparency in the fiscal operations and enhance strategies for better government expenditure. Also the central bank should use a tight monetary policy to compliment fiscal policy.