The dynamic of financial development, imports, foreign direct investment and economic growth: cointegration and causality analysis in Pakistan

Shahbaz, Muhammad and Rahman, Mohammad Mafizur (2012) The dynamic of financial development, imports, foreign direct investment and economic growth: cointegration and causality analysis in Pakistan. Global Business Review, 13 (2). pp. 201-219. ISSN 0972-1509

Abstract

The paper investigates the effect of financial development, imports and foreign direct investment (FDI) on output in case of Pakistan over the period of 1990-2008 using quarterly data set. The Autoregressive Distributed Lag (ARDL) bounds testing approach is applied to examine the long run relationship and the direction of causality is investigated using the Vector Error Correction Model (VECM) framework between the variables. Our findings confirm the existence of cointegration, showing long run relation between financial development, imports, FDI and economic growth. Financial development, imports and FDI have positive and significant effect on the economic growth of the country. Causality analysis reveals bidirectional relation among the variables but strong causality is also running from financial development, economic growth and FDI to real imports.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Permanent restricted access to published version, due to publisher's copyright policy (Sage).
Depositing User: Dr Mafiz Rahman
Faculty / Department / School: Historic - Faculty of Business and Law - School of Accounting, Economics and Finance
Date Deposited: 24 Jul 2012 05:07
Last Modified: 21 Jul 2014 05:36
Uncontrolled Keywords: financial development; imports; FDI; economic growth
Fields of Research (FOR2008): 14 Economics > 1402 Applied Economics > 140202 Economic Development and Growth
15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150205 Investment and Risk Management
14 Economics > 1403 Econometrics > 140305 Time-Series Analysis
Socio-Economic Objective (SEO2008): B Economic Development > 91 Economic Framework > 9101 Macroeconomics > 910103 Economic Growth
B Economic Development > 91 Economic Framework > 9101 Macroeconomics > 910105 Fiscal Policy
Identification Number or DOI: 10.1177/097215091201300202
URI: http://eprints.usq.edu.au/id/eprint/21586

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