The Relationship Between Economic Growth And Financial Development

The figures of both the trace statistics and the Max-Eigen statistics are all greater than their critical values at 5% significant level and also their corresponding probabilities are less than 5%, this implies that we reject the null hypothesis of no co-integration relationship at the 5% significant level for None and At most 1 respectively. But as we reject the null hypothesis of no co-integration relationship at the 5% significant level for None and At most 1, we fail to reject the null hypothesis of At most 2 co-integration relationship at the 5% significant level; since both the trace statistics (41.94812) and Max-Eigen test statistics (19.94812) are less than their critical values at same significant levels of (47.85613) and (27.58434) respectively. The co-integration test score shows the existence of long-run relationship among agricultural growth, export, foreign direct investment, infrastructure development, intellectual property right, literacy rate and research &

Also, this estimation allows the using of a lagged dependent variable to check whether there is a possible cointegration in the economic variables, with the possibility of one variable forecasting another (Campbell & Shiller, 1988). Including the lagged dependent variable can reduce the occurrence of autocorrelation arising

d) a high ( + or - ) r is proof of a cause & effect relationship between x & y

The error in the conclusion in this example would be that the linear correlation found between the number of cigarettes and the pulse rate suggests causality. While we can determine that there is a correlation between the pulse rate and number of cigarettes smoked, we cannot prove that the increases in number of cigarettes smoked cause increases in pulse rates, exclusively. Both variables might be affected by some other existing variable. Simply having a correlation between two variables doesn’t imply a causal relationship. To prove a causal relationship, further analysis is required. While a linear correlation shows the strength of the relationship between the two variables, but it does not show that the one variable is changing at direct

to prove a change in an independent variable causes a change in a dependent variable, but they

Granger demonstrated that the existence of a co- integration between two variables means that there is a causal relationship in one direction at least.

X may not be the cause of Y just because X is followed by Y.

On the first page, Hill’s criteria for causality is referenced. I now want you to research the term; “(Bradford) Hill’s criteria for causality” and list six of the possible nine (?) conditions to consider even before one can say “A” causes “B” (2)

The one-step approximation the estimates, generalized cook distance and likelihood distance are considered. Cook and likelihood distance are two statistical diagnostics method. Models diagnostics procedures imply both graphical and formal statistical tests. These procedures recognize us to inspect whether the supposition of the regression model are justifiable and decide whether we can belief subsequent inference outcome. We use these methods to explore the performance of residual and influence in nonlinear regression model. These residuals can produce confusing results when used in diagnostic method corresponding to those for linear regression. Simulation provide to

Financial development boosts economic growth have been shown by the increasing number of scholars, however whether the financial sector development could benefits the income distribution is still controversial. Under this question, this essay try to use statistically method to explore the relationship between income inequality and financial sector development.

In a developing country, such as Egypt, misuse and/or lack of foreign exchange is a main constraint to investment and economic growth, as foreign exchange is necessary to obtain foreign intermediate and capital goods. In addition, lack of foreign exchange results in devaluation of the Egyptian pound, which considered the main cause of inflation in the Egyptian economy.

Similarly, the study of Ramchandran and Kamaiah (1992) has also noticed the uni-directional causality running from money supply to price level for the economy of India as in case of Darrat (1986). On the other hand, the study of Aghevli and Khan (1978) for Brazil, Columbia, the Dominican Republic, and Thailand, has found bidirectional causality between money and prices. Likewise, Maish and Maish (1994) examined the question of causality between money and price in the context of Asian developing economy, India. This study supported monetarists’ view that money supply was leading variable and price was lagging variable in the context of India when they studied the linkage between money supply and price during the period

A key debate that is highlighted relates to the macro-level in particular the Granger causality between exchange rates and stock prices. Theoretical work would suggest that there two approaches in looking at this debate which are the traditional approach which

Granger causality test (Granger 1969) has been generally used to find the causality relationship between variables. This test told that if past values of a variable (y) significantly contribute to forecast the future value of another variable (x) then y is said to Granger cause x. Conversely, if past values of x statistically improve the prediction of y, then we can conclude that x Granger causes y (ibid). This paper also uses the tool of the Granger causality test to examine the causality relationship between SDP and EC. This paper used (Oxley and Greasley1998), a three-stage procedure to test the direction of causality which is also used by (Ghosh, S., 2002). The first step is to tests the order of integration of the variables

A considerable amount of theoretical and empirical literature emerged during the nineteenth-century surrounding the theory of economic growth. If one is to complete detailed research into how financial development affects different sources of economic growth alongside the effectiveness of fiscal policy, a meaningful and well-structured literature review must be presented. Due to the complicated nature of such a theory, a historical frame work will be adopted to dilute its complicated nature. The