Dharmendra Dhakal

Devaluation and the trade balance: estimating the long run effect

This study tests the effectiveness of devaluation on the trade balance in eight developing countries from Asia, Europe, Africa and Latin America. A unique and new methodology is used to estimate the long run effect of devaluation on the trade balance. The estimated results suggest that devaluation, in general, does not improve the trade balance in the long run. In some cases it even had a perverse effect.

Exports and Japanese economic development

Abstract The Granger causality test used in this paper indicates that Japanese growth in the prewar period was caused by the growth of the labor force and improvements in agricultural productivity. In the postwar period, growth in exports, labor force, and agricultural productivity caused output growth.

Determinants of Private Saving in South Asia

This article examines the determinants of private saving rates in five South Asian nations using annual time series data. An econometric model is developed in which private saving is a function of government expenditures, the money supply, the real interest rate, macroeconomic instability, per capita income growth and two demographic variables. Prior to carrying out the estimations, we test for the stationarity of the data series by carrying out unit root tests. The overall results indicate that government expenditures and past savings have a negative impact on private saving, while the level of financial development and per capita income growth have a positive effect. The degree of urbanization, the real interest rate and the dependency ratio have no noticeable impact on private saving.

The effect of education in Nepal's traditional agriculture

Abstract In this paper the contribution of education to agricultural production and productivity in Nepal is examined. The approach used is a modification and extension of a technique used by Welch that involves the estimation of three functions: an engineering production function, a gross revenue function, and a value added function. This modified approach is applied to data collected from 600 farm families of the Nuwakot District in Nepal. The results show that Welchs approach underestimates the contribution of education to agricultural productivity in traditional agriculture.

Nepal and Bhutan: economic growth in two Shangri-Las

Purpose – The purpose of this paper is to examine the economic development strategies of Nepal and Bhutan to understand the economic factors that have contributed to economic growth. Design/methodology/approach – After a brief discussion of each countrys modern history, their economies are examined together with their development strategies during the past half century. Standard economic growth models for Nepal and Bhutan are developed and estimated. To ensure the stationarity of the data series, tests of unit root are conducted. Further, a cointegration test is conducted and an appropriate error-correction model is developed. Findings – The results of the estimations reveal that domestic capital has been a significant source of economic growth in Nepal whereas foreign aid has not had any appreciable effect on growth. In the case of Bhutan, foreign assistance has been a significant source of growth while domestic capital has not. Research limitations/implications – Bhutan and Nepal also differ in terms of non-economic factors such as culture, language, politics, and religion. These factors may also help to explain the difference in economic performance of these countries. While important, these issues are beyond the scope this paper and indicate directions for further research. Originality/value – It is one of the first attempts to compare the economic growth strategies of Nepal and Bhutan. It may provide useful insight to policymakers and others interested in economic growth in Nepal, Bhutan and other developing countries.

The role of savings in economic development the U.S. and Japanese experiences

Abstract This paper explores the relationship between savings and growth in the United States and in Japan within a simple Granger causality framework. For Japan, growth caused savings before World War II while after World War II savings caused growth. For the US, growth caused savings after World War II. These results suggest that the savings-growth relationship may depend upon the stage of development.

Housing prices, stock prices and the US economy

ABSTRACT This paper studies the relationship between housing prices, stock prices, interest rates and aggregate output in the US using monthly data from 1993 to 2014. Evidence from causality tests and a variance decomposition procedure suggest that stock prices have a much larger effect on aggregate output in the US economy than do either housing prices or interest rates. Instead, the wealth effect created by changes in stock prices has a relatively large impact on US aggregate output. Separate estimations and variance decompositions for the sample periods 1993–2001, 2002–2008 and 2009–2014 show that the impact of housing prices relative to stock prices has been waning over time.