Does exchange rate volatility deter trade in Sub-Saharan Africa?
- Meniago, Christelle, Eita, Joel Hinaunye
- Authors: Meniago, Christelle , Eita, Joel Hinaunye
- Date: 2017
- Subjects: Exchange Rate Volatility , Panel Data , Sub-Saharan Africa
- Language: English
- Type: Articles
- Identifier: http://hdl.handle.net/10210/241277 , uj:24836 , Citation: Meniago, C. & Eita, J.H. 2017. Does exchange rate volatility deter trade in Sub-Saharan Africa? International Journal of Economics and Financial Issues, 2017, 7(4), 62-69. ISSN: 2146-4138
- Description: Abstract: This study investigates the effects of exchange rate volatility on trade in 39 selected Sub-Saharan Africa (SSA) countries for the period 1995-2012. Export and import models were estimated using panel data econometric technique. Three measures of volatility are used. These are standard deviation, generalized autoregressive conditional heteroskedasticity and Hodrick-Prescott (HP)-Filter. The results suggest that the effect of exchange rate volatility on trade is dependent of the type of volatility measure used. This reflects the importance of not solely relying on a unique measure of volatility. The results revealed that exchange rate volatility (measured with standard deviation and HP filter) depresses exports, suggesting that SSA exporters are susceptible to reduce their export activities when exchange rates become volatile. However, the fact that the degree of the impact of exchange rate volatility on trade is relatively weak, suggest that should SSA’s policy makers decide to pursue a policy intended to reduce exchange rate volatility in order to boost trade, it might be of little or no value. The results also indicate that exchange rate volatility is associated with a reduction in imports.
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- Authors: Meniago, Christelle , Eita, Joel Hinaunye
- Date: 2017
- Subjects: Exchange Rate Volatility , Panel Data , Sub-Saharan Africa
- Language: English
- Type: Articles
- Identifier: http://hdl.handle.net/10210/241277 , uj:24836 , Citation: Meniago, C. & Eita, J.H. 2017. Does exchange rate volatility deter trade in Sub-Saharan Africa? International Journal of Economics and Financial Issues, 2017, 7(4), 62-69. ISSN: 2146-4138
- Description: Abstract: This study investigates the effects of exchange rate volatility on trade in 39 selected Sub-Saharan Africa (SSA) countries for the period 1995-2012. Export and import models were estimated using panel data econometric technique. Three measures of volatility are used. These are standard deviation, generalized autoregressive conditional heteroskedasticity and Hodrick-Prescott (HP)-Filter. The results suggest that the effect of exchange rate volatility on trade is dependent of the type of volatility measure used. This reflects the importance of not solely relying on a unique measure of volatility. The results revealed that exchange rate volatility (measured with standard deviation and HP filter) depresses exports, suggesting that SSA exporters are susceptible to reduce their export activities when exchange rates become volatile. However, the fact that the degree of the impact of exchange rate volatility on trade is relatively weak, suggest that should SSA’s policy makers decide to pursue a policy intended to reduce exchange rate volatility in order to boost trade, it might be of little or no value. The results also indicate that exchange rate volatility is associated with a reduction in imports.
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Empirical test of the Ricardian Equivalence in the Kingdom of Lesotho
- Mosikari, Teboho Jeremiah, Eita, Joel Hinaunye
- Authors: Mosikari, Teboho Jeremiah , Eita, Joel Hinaunye
- Date: 2017
- Subjects: Government debt , Ricardian Equivalence , Household consumption per capita
- Language: English
- Type: Articles
- Identifier: http://hdl.handle.net/10210/241285 , uj:24837 , Citation: Mosikari, T.J. & Eita, J.H. 2017. Empirical test of the Ricardian Equivalence in the Kingdom of Lesotho. Cogent Economics & Finance (2017), 5: 1351674. https://doi.org/10.1080/23322039.2017.1351674.
- Description: Abstract: The objective of this paper is to test the existence of Ricardian Equivalence in Lesotho using annual data for two sample periods, 1980–2014 and 1988–2014. This proposition is important and has crucial implications for tax policy. Household consumption, government debt, government expenditure, GDP per capita, population growth and inflation are variables which are used for this analysis. The study used ARDL cointegration approach to investigate the relationship between these variables. The study found that there is long run equilibrium relationship among the variables in two sample periods. The results show that an increase in government debt or government expenditure will decrease household consumption per capita. This implies that the Ricardian Equivalence does hold for Lesotho. The results also imply that fiscal policy is an ineffective tool to stabilize the economy. Lesotho has limited fiscal flexibility, and it will be difficult or challenging to increase private consumption and economic growth, particularly during economic downturn.
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- Authors: Mosikari, Teboho Jeremiah , Eita, Joel Hinaunye
- Date: 2017
- Subjects: Government debt , Ricardian Equivalence , Household consumption per capita
- Language: English
- Type: Articles
- Identifier: http://hdl.handle.net/10210/241285 , uj:24837 , Citation: Mosikari, T.J. & Eita, J.H. 2017. Empirical test of the Ricardian Equivalence in the Kingdom of Lesotho. Cogent Economics & Finance (2017), 5: 1351674. https://doi.org/10.1080/23322039.2017.1351674.
- Description: Abstract: The objective of this paper is to test the existence of Ricardian Equivalence in Lesotho using annual data for two sample periods, 1980–2014 and 1988–2014. This proposition is important and has crucial implications for tax policy. Household consumption, government debt, government expenditure, GDP per capita, population growth and inflation are variables which are used for this analysis. The study used ARDL cointegration approach to investigate the relationship between these variables. The study found that there is long run equilibrium relationship among the variables in two sample periods. The results show that an increase in government debt or government expenditure will decrease household consumption per capita. This implies that the Ricardian Equivalence does hold for Lesotho. The results also imply that fiscal policy is an ineffective tool to stabilize the economy. Lesotho has limited fiscal flexibility, and it will be difficult or challenging to increase private consumption and economic growth, particularly during economic downturn.
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Modelling asymmetric relationship between exports and growth in a developing economy : evidence from Namibia
- Mosikari, Teboho Jeremiah, Eita, Joel Hinaunye
- Authors: Mosikari, Teboho Jeremiah , Eita, Joel Hinaunye
- Date: 2020
- Subjects: Economic growth , Export , Asymmetric modelling
- Language: English
- Type: Article
- Identifier: http://hdl.handle.net/10210/437114 , uj:37942 , ISSN: (Online) 2222-3436 , Citation: Mosikari, T.J. & Eita, J.H., 2020, ‘Modelling asymmetric relationship between exports and growth in a developing economy: Evidence from Namibia’, South African Journal of Economic and Management Sciences 23(1), a2905. https://doi.org/ 10.4102/sajems.v23i1.2905
- Description: Abstract: Background: Namibia is an open economy where international trade accounts for a greater proportion of gross domestic product (GDP). Openness of the Namibian economy for the period 2010 to 2018 has been on average 111% of GDP. The high level of openness of the economy raised an important question on the relationship between export and economic growth in Namibia. Previous studies investigated the linear relationship between these two variables. The investigation was also done at an aggregate level. This raises important questions on whether the relationship between export and economic growth is asymmetric. It also raises an important question on whether this relationship is sector specific. Aim: In order to fill the gap in previous research, this study investigates the asymmetric or non-linear relationship between the main export sectors and economic growth in Namibia. A non-linear relationship between the two variables will indicate that negative and positive values of the explanatory variables have different effects on the dependent variable. This analysis is done for the main export sectors of the Namibian economy in order to ensure the policy recommendations are sector specific. Setting: Standard economic theoretical models on the relationship between export and economic growth are used to test the non-linear relationship between the two variables. The study covers the period 2010–2018 and focuses on the three main export sectors (diamonds, manufactured food and live animal products) and growth of the Namibian economy. Methods: This study uses non-linear autoregressive distributive lag in order to estimate the asymmetric relationship between the main export sectors and economic growth of Namibia. The estimation is done for the three main exporters of the Namibian economy. Results: The results indicate that there is a symmetric relationship between main export sectors and economic growth of the Namibian economy. The results show that an increase (positive values) in export of the three main export products will cause economic growth to improve. Negative values (decrease in export) will cause economic growth to deteriorate. Conclusion: The results suggest that estimating the non-linear relationship for different sectors of the economy (instead of estimating the relationship at aggregate level for total exports) will ensure that economic policies are sector-specific. The results further suggest that when exports are declining, expansionary policies will be the appropriate responses.
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- Authors: Mosikari, Teboho Jeremiah , Eita, Joel Hinaunye
- Date: 2020
- Subjects: Economic growth , Export , Asymmetric modelling
- Language: English
- Type: Article
- Identifier: http://hdl.handle.net/10210/437114 , uj:37942 , ISSN: (Online) 2222-3436 , Citation: Mosikari, T.J. & Eita, J.H., 2020, ‘Modelling asymmetric relationship between exports and growth in a developing economy: Evidence from Namibia’, South African Journal of Economic and Management Sciences 23(1), a2905. https://doi.org/ 10.4102/sajems.v23i1.2905
- Description: Abstract: Background: Namibia is an open economy where international trade accounts for a greater proportion of gross domestic product (GDP). Openness of the Namibian economy for the period 2010 to 2018 has been on average 111% of GDP. The high level of openness of the economy raised an important question on the relationship between export and economic growth in Namibia. Previous studies investigated the linear relationship between these two variables. The investigation was also done at an aggregate level. This raises important questions on whether the relationship between export and economic growth is asymmetric. It also raises an important question on whether this relationship is sector specific. Aim: In order to fill the gap in previous research, this study investigates the asymmetric or non-linear relationship between the main export sectors and economic growth in Namibia. A non-linear relationship between the two variables will indicate that negative and positive values of the explanatory variables have different effects on the dependent variable. This analysis is done for the main export sectors of the Namibian economy in order to ensure the policy recommendations are sector specific. Setting: Standard economic theoretical models on the relationship between export and economic growth are used to test the non-linear relationship between the two variables. The study covers the period 2010–2018 and focuses on the three main export sectors (diamonds, manufactured food and live animal products) and growth of the Namibian economy. Methods: This study uses non-linear autoregressive distributive lag in order to estimate the asymmetric relationship between the main export sectors and economic growth of Namibia. The estimation is done for the three main exporters of the Namibian economy. Results: The results indicate that there is a symmetric relationship between main export sectors and economic growth of the Namibian economy. The results show that an increase (positive values) in export of the three main export products will cause economic growth to improve. Negative values (decrease in export) will cause economic growth to deteriorate. Conclusion: The results suggest that estimating the non-linear relationship for different sectors of the economy (instead of estimating the relationship at aggregate level for total exports) will ensure that economic policies are sector-specific. The results further suggest that when exports are declining, expansionary policies will be the appropriate responses.
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Modelling total factor productivity in a developing economy
- Eita, Joel Hinaunye, Pedro, Marcio Jose
- Authors: Eita, Joel Hinaunye , Pedro, Marcio Jose
- Date: 2021
- Subjects: Angola , Total factor productivity , ARDL
- Language: English
- Type: Article
- Identifier: http://hdl.handle.net/10210/478647 , uj:43265 , DOI: 10.2478/subboec-2021-0005 , Citation: Eita, J.H. & Pedro, M.J. 2021. Modelling total factor productivity in a developing economy.
- Description: Abstract: Total factor productivity is an important driver of economic growth. It is therefore important to understand its determinants. This will help to enhance it and accelerate economic growth. The objective of this paper is therefore to investigate drivers of total factor productivity in Angola. The investigation covers the period 1995 – 2018. It is conducted for selected sectors of the economy. The results show that foreign direct investment has a positive effect on total factor productivity in all sectors. Increase in openness of the economy and depreciation the exchange rate have a positive effect on total factor productivity in the manufacturing sector. However, an increase in these two variables is associated with a decrease in total factor productivity of the primary and service sectors. The results indicate that a rise in inflation is associated with a decrease in total factor productivity in the manufacturing and service sectors. However, an increase in inflation is positively associated with an increase in total factor productivity in the primary sector. Increase in official development assistance impact negatively on total factor productivity in the primary and service sectors. This variable has a positive effect on total factor productivity of the manufacturing sector. The implication of these results is that Angola should pursue policies that attract foreign direct investment in order to ensure sustainable total factor productivity growth. The impact of other drivers such as openness of the economy, inflation, official development assistance and exchange rate depends on sectors. This implies that it is important for Angola to implement policies, which are specific to sectors. This will help to enhance the growth of total factor productivity.
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- Authors: Eita, Joel Hinaunye , Pedro, Marcio Jose
- Date: 2021
- Subjects: Angola , Total factor productivity , ARDL
- Language: English
- Type: Article
- Identifier: http://hdl.handle.net/10210/478647 , uj:43265 , DOI: 10.2478/subboec-2021-0005 , Citation: Eita, J.H. & Pedro, M.J. 2021. Modelling total factor productivity in a developing economy.
- Description: Abstract: Total factor productivity is an important driver of economic growth. It is therefore important to understand its determinants. This will help to enhance it and accelerate economic growth. The objective of this paper is therefore to investigate drivers of total factor productivity in Angola. The investigation covers the period 1995 – 2018. It is conducted for selected sectors of the economy. The results show that foreign direct investment has a positive effect on total factor productivity in all sectors. Increase in openness of the economy and depreciation the exchange rate have a positive effect on total factor productivity in the manufacturing sector. However, an increase in these two variables is associated with a decrease in total factor productivity of the primary and service sectors. The results indicate that a rise in inflation is associated with a decrease in total factor productivity in the manufacturing and service sectors. However, an increase in inflation is positively associated with an increase in total factor productivity in the primary sector. Increase in official development assistance impact negatively on total factor productivity in the primary and service sectors. This variable has a positive effect on total factor productivity of the manufacturing sector. The implication of these results is that Angola should pursue policies that attract foreign direct investment in order to ensure sustainable total factor productivity growth. The impact of other drivers such as openness of the economy, inflation, official development assistance and exchange rate depends on sectors. This implies that it is important for Angola to implement policies, which are specific to sectors. This will help to enhance the growth of total factor productivity.
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Productivity and real exchange rate : investigating the Balassa-Samuelson effect and misalignment in five African countries
- Eita, Joel Hinaunye, Khumalo, Zitsile Zamantungwa, Choga, Ireen
- Authors: Eita, Joel Hinaunye , Khumalo, Zitsile Zamantungwa , Choga, Ireen
- Date: 2021
- Subjects: Balassa-Samuelson effect , Real exchange rate , Real exchange rate misalignment
- Language: English
- Type: Article
- Identifier: http://hdl.handle.net/10210/483341 , uj:43863 , Citation: Eita, J.H., Khumalo, Z.Z. & Choga, I. 2021. Productivity and real exchange rate : investigating the Balassa-Samuelson effect and misalignment in five African countries.
- Description: Abstract: The study aims to investigate the validity of the Balassa-Samuelson Effect in a sample of five African countries, the Democratic Republic of Congo, Mauritius, Morocco, South Africa and Tunisia for the period 1991 to 2016. The study first estimates the equilibrium real exchange rate with variables real exchange rate, productivity, terms of trade and net foreign assets. Secondly, real exchange rate misalignment is derived and lastly, the effects of real exchange rate misalignment on economic performance are tested. For the methodology, the Fully Modified Ordinary Least Squares (FMOLS) and pool mean group econometric (PMG) techniques were utilised. The outcomes of the study indicate a valid Balassa-Samuelson effect in all five African countries and a negative effect of real exchange rate misalignment on economic performance. The study contributes to scientific progress by introducing an appropriate measure of total factor productivity in testing for the validity of the Balassa-Samuelson hypothesis.
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- Authors: Eita, Joel Hinaunye , Khumalo, Zitsile Zamantungwa , Choga, Ireen
- Date: 2021
- Subjects: Balassa-Samuelson effect , Real exchange rate , Real exchange rate misalignment
- Language: English
- Type: Article
- Identifier: http://hdl.handle.net/10210/483341 , uj:43863 , Citation: Eita, J.H., Khumalo, Z.Z. & Choga, I. 2021. Productivity and real exchange rate : investigating the Balassa-Samuelson effect and misalignment in five African countries.
- Description: Abstract: The study aims to investigate the validity of the Balassa-Samuelson Effect in a sample of five African countries, the Democratic Republic of Congo, Mauritius, Morocco, South Africa and Tunisia for the period 1991 to 2016. The study first estimates the equilibrium real exchange rate with variables real exchange rate, productivity, terms of trade and net foreign assets. Secondly, real exchange rate misalignment is derived and lastly, the effects of real exchange rate misalignment on economic performance are tested. For the methodology, the Fully Modified Ordinary Least Squares (FMOLS) and pool mean group econometric (PMG) techniques were utilised. The outcomes of the study indicate a valid Balassa-Samuelson effect in all five African countries and a negative effect of real exchange rate misalignment on economic performance. The study contributes to scientific progress by introducing an appropriate measure of total factor productivity in testing for the validity of the Balassa-Samuelson hypothesis.
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Supply and demand macro-econometric model of a small economy: evidence from Namibia
- Authors: Eita, Joel Hinaunye
- Date: 2018
- Subjects: Macro-econometric , Supply-side , Demand-side
- Language: English
- Type: Article
- Identifier: http://hdl.handle.net/10210/273517 , uj:29140 , Citation: Eita, J.H. 2018. Supply and demand macro-econometric model of a small economy: evidence from Namibia. Development Southern Africa, 35(2):225–254. DOI: https://doi.org/10.1080/0376835X.2018.1435262 , ISSN: 0376-835X (Print) , ISSN: 1470-3637 (Online)
- Description: Abstract: This study develops a macroeconometric model for the Namibian economy. This macro-econometric model estimates both the demand and supply sides of the Namibian economy. This model incorporates the price sector in order to serve as a link between the supply and demand sides of the economy. The model consists of behavioural equations, linked by identities and definitions. These behavioural equations were estimated and simulated individually. They were then combined together to form a full macro-econometric model of the Namibian economy. The full macro-econometric model was closed using two models. The first model activates the supply side and marginalises the demand side. The second model is demand side orientated which activates the demand side and marginalises the supply side. The results indicate that the estimated values closely approximate the actual values. This macro-econometric model can be used to apply policy simulations in order to determine appropriate economic policies for Namibia.
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- Authors: Eita, Joel Hinaunye
- Date: 2018
- Subjects: Macro-econometric , Supply-side , Demand-side
- Language: English
- Type: Article
- Identifier: http://hdl.handle.net/10210/273517 , uj:29140 , Citation: Eita, J.H. 2018. Supply and demand macro-econometric model of a small economy: evidence from Namibia. Development Southern Africa, 35(2):225–254. DOI: https://doi.org/10.1080/0376835X.2018.1435262 , ISSN: 0376-835X (Print) , ISSN: 1470-3637 (Online)
- Description: Abstract: This study develops a macroeconometric model for the Namibian economy. This macro-econometric model estimates both the demand and supply sides of the Namibian economy. This model incorporates the price sector in order to serve as a link between the supply and demand sides of the economy. The model consists of behavioural equations, linked by identities and definitions. These behavioural equations were estimated and simulated individually. They were then combined together to form a full macro-econometric model of the Namibian economy. The full macro-econometric model was closed using two models. The first model activates the supply side and marginalises the demand side. The second model is demand side orientated which activates the demand side and marginalises the supply side. The results indicate that the estimated values closely approximate the actual values. This macro-econometric model can be used to apply policy simulations in order to determine appropriate economic policies for Namibia.
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The impact of fiscal deficit on inflation in Namibia
- Eita, Joel Hinaunye, Manuel, Victoria, Naimhwaka, Erwin, Nakusera, Florette
- Authors: Eita, Joel Hinaunye , Manuel, Victoria , Naimhwaka, Erwin , Nakusera, Florette
- Date: 2021
- Subjects: Fiscal deficit , Inflation , Namibia
- Language: English
- Type: Article
- Identifier: http://hdl.handle.net/10210/478552 , uj:43253 , Citation: Eita, J.H. et al. 2021. The impact of fiscal deficit on inflation in Namibia. , DOI: 10.2478/jcbtp-2021-0007
- Description: Abstract: This paper examined the impact of fiscal deficit on inflation in Namibia. The paper employed Autoregressive Distributed Lag Model (ARDL) and Granger causality approach using quarterly data for the period 2002 - 2017. Empirical results showed evidence of a long run positive effect of fiscal deficit on inflation in Namibia. This suggests that fiscal deficit has a direct effect on inflation in Namibia. The study also found a unidirectional causality running from fiscal deficit to inflation in Namibia. The study confirmed that South Africa’s prices have positive effect on inflation in Namibia. The key policy implication drawn for the result is that if not contained, high negative fiscal balances could impair the monetary policy objective of price stability. It is therefore advised that fiscal and monetary policies need to be well coordinated to bring fiscal deficit within acceptable level. Given that the main monetary policy goal in Namibia is to achieve and maintain price stability, the results in this study suggest that monitoring budget deficits and price developments in South Africa to develop informed policies is one way to achieve this objective.
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- Authors: Eita, Joel Hinaunye , Manuel, Victoria , Naimhwaka, Erwin , Nakusera, Florette
- Date: 2021
- Subjects: Fiscal deficit , Inflation , Namibia
- Language: English
- Type: Article
- Identifier: http://hdl.handle.net/10210/478552 , uj:43253 , Citation: Eita, J.H. et al. 2021. The impact of fiscal deficit on inflation in Namibia. , DOI: 10.2478/jcbtp-2021-0007
- Description: Abstract: This paper examined the impact of fiscal deficit on inflation in Namibia. The paper employed Autoregressive Distributed Lag Model (ARDL) and Granger causality approach using quarterly data for the period 2002 - 2017. Empirical results showed evidence of a long run positive effect of fiscal deficit on inflation in Namibia. This suggests that fiscal deficit has a direct effect on inflation in Namibia. The study also found a unidirectional causality running from fiscal deficit to inflation in Namibia. The study confirmed that South Africa’s prices have positive effect on inflation in Namibia. The key policy implication drawn for the result is that if not contained, high negative fiscal balances could impair the monetary policy objective of price stability. It is therefore advised that fiscal and monetary policies need to be well coordinated to bring fiscal deficit within acceptable level. Given that the main monetary policy goal in Namibia is to achieve and maintain price stability, the results in this study suggest that monitoring budget deficits and price developments in South Africa to develop informed policies is one way to achieve this objective.
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Towards an effective fiscal stimulus : evidence from Botswana
- Timuno, Sayed O. M., Eita, Joel Hinaunye
- Authors: Timuno, Sayed O. M. , Eita, Joel Hinaunye
- Date: 2020
- Subjects: Econometrics , Economic Forecasting , Public Finance
- Language: English
- Type: Article
- Identifier: http://hdl.handle.net/10210/437106 , uj:37941 , Citation: Sayed O. M. Timuno & Joel Hinaunye Eita | (2020) Towards an effective fiscal stimulus: Evidence from Botswana, Cogent Economics & Finance, 8:1, 1790948, DOI: 10.1080/23322039.2020.1790948
- Description: Abstract: While there is a general agreement on the effectiveness of fiscal stimulus, there is no consensus on which stimulus is better. To address this concern, this paper uses a Dynamic Stochastic General Equilibrium (DSGE) model to propose a fiscal stimulus that Botswana can adopt given the slowing mining productivity. The results suggest that short-run macroeconomic stabilisation can be achieved through a cut in labour taxes. This fiscal stimulus generates larger growth multipliers and contributes relatively more employment compared to a cut in consumption tax and increases in government spending. The findings also revealed that a cut in labour taxes improves trade balance, resulting in a greater accumulation of international reserves and has no Dutch disease effects. These results suggest the need for a labour tax policy reform. These results also offer some policy options for other developing countries, which may face similar fiscal risks in future.
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- Authors: Timuno, Sayed O. M. , Eita, Joel Hinaunye
- Date: 2020
- Subjects: Econometrics , Economic Forecasting , Public Finance
- Language: English
- Type: Article
- Identifier: http://hdl.handle.net/10210/437106 , uj:37941 , Citation: Sayed O. M. Timuno & Joel Hinaunye Eita | (2020) Towards an effective fiscal stimulus: Evidence from Botswana, Cogent Economics & Finance, 8:1, 1790948, DOI: 10.1080/23322039.2020.1790948
- Description: Abstract: While there is a general agreement on the effectiveness of fiscal stimulus, there is no consensus on which stimulus is better. To address this concern, this paper uses a Dynamic Stochastic General Equilibrium (DSGE) model to propose a fiscal stimulus that Botswana can adopt given the slowing mining productivity. The results suggest that short-run macroeconomic stabilisation can be achieved through a cut in labour taxes. This fiscal stimulus generates larger growth multipliers and contributes relatively more employment compared to a cut in consumption tax and increases in government spending. The findings also revealed that a cut in labour taxes improves trade balance, resulting in a greater accumulation of international reserves and has no Dutch disease effects. These results suggest the need for a labour tax policy reform. These results also offer some policy options for other developing countries, which may face similar fiscal risks in future.
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