Gyan Pradhan

Exchange rate uncertainty and the level of investment in selected South-east Asian countries

The effect of real exchange rate uncertainty on aggregate private investment in Indonesia, Malaysia, the Philippines and Thailand is examined using time series data from 1972–2000. Since the use of non-stationary time series data may produce spurious results, the data series are tested for stationarity using the augmented Dickey–Fuller and Phillips–Perron tests. After establishing the stationarity of the data series, cointegration tests are performed. The cointegration test results reject the hypothesis of no cointegration. Therefore, an error correction model is developed and estimated. The estimated results point to an inconclusive empirical relationship between real exchange rate volatility and aggregate private investment.

Economic cost of Sri Lanka's ethnic conflict

Abstract Despite its low income per capita, Sri Lanka has achieved remarkable success in human development, largely due to appropriate government policies on health and education. However, Sri Lankas economic performance has been below its potential, and the unresolved civil conflict poses one of the greatest obstacles to its long terms growth prospects. This article examines some indirect costs of Sri Lankas civil war. It argues that the conflict has resulted in lower domestic and foreign investments, disruptions in trade and commerce, and lower revenues from tourism. As a consequence, economic growth has suffered. With no end in sight to the civil war, these costs are likely to mount, with pernicious effects on future living standards.

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 impact of budget deficits on national saving in the USA

This paper analyses the effect of government budget deficits on national saving in the USA utilizing annual time series data from 1967 to 1996. A model that includes budget deficits, money supply, real exchange rate, real interest rate, and the proportion of working age population to total population to explain national saving is developed. After examining the time series properties of the data an error correction model is estimated. The overall results suggest that an increase in government budget deficits tend to reduce national saving. The working age population coming out of the baby boom generation has positively contributed to an increase in national saving.

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.