Analyzing the Consequences of Long-Run Civil War on Unemployment Rate: Empirical Evidence from Afghanistan
Abstract
:1. Introduction
2. Literature Review
3. Methodology
3.1. Model Specification
3.2. Measurement and Data Sources
3.3. Construction of (cfi)
4. Results and Discussions
4.1. Stationarity Result
4.2. Cointegration Analysis
4.3. Non-Linear ARDL Results
4.4. Non-Linear Causality Analysis
5. Conclusions
Limitations of the Study
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
Abbreviations
AIC | Akaike information criterion |
ARDL | autoregressive distributed lags |
CUSUM | cumulative sum |
CUSUMSQ | cumulative sum of squares |
CV | critical values |
cow | cost of war, |
cfi | composite financial inclusion index |
gdpg | GDP growth |
FAS | Financial Access Survey |
fge | final government expenditure |
fdi | foreign direct investment |
HQIC | Hannan–Quinn information criterion |
IMF | International Monetary Fund |
inf | inflation ration |
Port. | Portmanteau test |
SC | serial correlation |
SIC | Schwarz information criterion |
BP | Breusch–Pegan |
JB | Jarque–Bera |
ser | secondary school enrollment rate |
pgr | population growth |
rol | rule of law |
uer | unemployment rate |
WDI | World Development Indicators |
WGI | Worldwide Governance Indicators |
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Full Name | Symbol | Measurement | Sources | Summary Statistics | ||
---|---|---|---|---|---|---|
Mean | Max. | Min. | ||||
Unemployment rate | This variable measures the number of people actively looking for job as a percentage of total labor force. | WDI | 11.396 | 11.730 | 10.980 | |
Cost of war | Cost of war is in millions of US dollars and originated from the US Department of Defense Budget, and then it is divided by GDP that is sourced from WDI. Therefore, it is expressed as a percentage of GDP. | USDS Budget | 28.389 | 37.221 | 19.473 | |
School enrollment rate | School enrollment rate presents the secondary school enrollment ratio expressed as a gross percentage of the total enrollment in Afghanistan. | WDI | 39.411 | 58.340 | 12.325 | |
Final government expenditure | Final government expenditure is expressed as a percentage of GDP. | WDI | 3.817 | 5.236 | 1.049 | |
Composite financial inclusion index | Composite financial inclusion index is estimated using the methodology proposed by Sarma [51] to reflect a comprehensive measure of financial inclusion in Afghanistan. It is expressed as numbers; 0 = perfect financial exclusion, and 1 = perfect financial inclusion. | FAS | 0.415 | 0.442 | 0.218 | |
The rule of law | The rule of law is expressed as a percentile rank [0 = no rule of law; 100 = perfect rule of law]. Therefore, the higher the percentile rank, the higher the institutional quality is. | WGI | 2.467 | 5.769 | 0.469 | |
Official inflation rate | Inflation rate is measured by the consumer price index and reflects the annual percentage change in the cost to the average consumer of acquiring a basket of goods and services. | IFS/IMF | 5.836 | 26.400 | −6.800 | |
Foreign direct investment | It is the net inflow of investment to acquire a lasting management interest in an enterprise operating in an economy. It is expressed as a percentage of GDP. | WDI | 1.157 | 4.400 | 0.100 | |
Population growth rate | This variable is expressed as a percentage of change in the population. | WDI | 17.226 | 17.477 | 16.933 | |
GDP growth rate | GDP growth is expressed as a percentage of growth in gross domestic product. | WDI | 6.246 | 21.400 | −2.400 |
Dimensions | Indicators | Assigned Weights |
---|---|---|
Banking penetration |
| 0.50 |
0.50 | ||
Availability of financial services |
| 0.70 |
0.30 | ||
Usage of financial services |
| 0.50 |
0.50 |
uer | cow | ser | fge | cfi | rol | inf | fdi | Pgr | gdpg | |
---|---|---|---|---|---|---|---|---|---|---|
uer | 1.000 | 0.489 | −0.206 | 0.444 | −0.467 | −0.273 | 0.487 | 0.420 | 0.500 | −0.336 |
cow | 1.000 | −0.519 * | 0.504 * | 0.229 | 0.082 | 0.338 | −0.182 | 0.202 | 0.217 | |
ser | 1.000 | 0.421 * | 0.388 | 0.517 * | −0.076 | 0.367 | −0.490 | 0.540 * | ||
fge | 1.000 | −0.111 | −0.409 | −0.264 | 0.319 | −0.254 | 0.462 | |||
cfi | 1.000 | 0.255 | −0.311 | 0.442 | −0.099 | 0.337 | ||||
rol | 1.000 | −0.402 | −0.402 | −0.017 | 0.125 | |||||
Inf | 1.000 | −0.199 | 0.287 | −0.441 | ||||||
fdi | 1.000 | 0.188 | 0.503 | |||||||
pgr | 1.000 | −0.390 | ||||||||
gdpg | 1.000 |
Lags | LogL | AIC | SIC | HIC |
---|---|---|---|---|
0 | −110.429 | −8.339 | −8.391 | −8.322 |
1 | 122.071 | −8.595 | −8.389 | −8.511 |
2 | 139.448 | −8.600 *** | −8.461 *** | −8.541 *** |
3 | 146.222 | −8.558 | −7.492 | −8.428 |
4 | 161.331 | −8.508 | −7.889 | −8.349 |
5 | 201.418 | −8.520 | −7.665 | −8.106 |
Tests Estimated | |||||
---|---|---|---|---|---|
ADF at level | −3.083 ** | −1.087 | −2.661 ** | −1.521 | −4.285 *** |
PP at level | −3.611 ** | −0.963 | −2.153 * | −1.426 | −2.847 * |
ADF at level | −1.654 | −1.973 | −2.153 | −2.084 | −0.217 |
PP at level | −1.235 | −1.429 | −1.029 | −0.959 | −0.925 |
ADF at first difference | −4.353 *** | −3.850 *** | −5.887 *** | −3.332 ** | −5.324 *** |
PP at first difference | −4.169 *** | −3.340 ** | −4.468 *** | −3.150 ** | −4.299 *** |
ADF at first difference | −4.412 *** | −4.356 *** | −3.866 *** | −3.921 *** | −3.591 *** |
PP at first difference | −3.683 *** | −3.718 *** | −3.801 *** | −3.942 *** | −3.373 ** |
Tests Estimated | |||||
---|---|---|---|---|---|
Test statistics | −7.104 *** | −0.734 | −4.461 *** | −0.899 | −7.318 *** |
Break date | 2014:Q3 | 2018:Q6 | 2004:Q9 | ||
Result | Stationary | Non-stationary | Stationary | Non-stationary | Stationary |
Test statistics | −6.399 *** | −4.927 *** | −1.099 | −1.581 | −1.374 |
Break date | 2009:Q2 | 2015:Q3 | |||
Result | Stationary | Stationary | Non-stationary | Non-stationary | Non-stationary |
DV: uer Test Statistics | Values | CV at 1% | Null: No Cointegration | |
---|---|---|---|---|
I(0) | I(1) | |||
F-statistics | 39.196 *** | 2.65 | 3.97 | Reject the null. |
t-statistics | −10.651 *** | −3.42 | −5.54 | Reject the null. |
DV: uer Test Statistics | Values | CV at 1% | Results | |
---|---|---|---|---|
I(0) | I(1) | |||
NARDL bound test | ||||
F-statistics | 6.371 *** | 3.43 | 5.68 | Reject the null. |
t-statistics | −7.544 *** | −3.13 | −5.18 | Reject the null. |
Wald test | ||||
Short-run asymmetries | 128.044 *** | [0.000] | Reject the null. | |
Long-run asymmetries | 389.227 *** | [0.000] | Reject the null. |
Dependent Variables: Unemployment Rate | Short-Run Estimates | Long-Run Estimates | ||||
---|---|---|---|---|---|---|
Coefficients | t-Statistics | p-Values | Coefficients | t-Statistics | p-Values | |
0.218 *** | 3.94 | 0.000 | 0.405 *** | 8.25 | 0.000 | |
−0.221 ** | −2.22 | 0.019 | −0.387 ** | −2.50 | 0.038 | |
−0.170 *** | −4.00 | 0.000 | −0.049 *** | −4.66 | 0.000 | |
0.066 *** | 3.07 | 0.000 | 0.057 *** | 3.21 | 0.000 | |
−0.290 *** | −3.81 | 0.000 | −0.019 *** | −3.98 | 0.000 | |
0.110 *** | 4.19 | 0.000 | 0.020 *** | −3.85 | 0.000 | |
−0.016 *** | −4.03 | 0.000 | −0.013 *** | −4.57 | 0.000 | |
0.007 *** | 7.94 | 0.000 | 0.097 *** | 4.02 | 0.000 | |
−0.108 *** | −8.10 | 0.000 | −0.063 *** | −4.04 | 0.000 | |
0.267 *** | 8.60 | 0.000 | 0.024 *** | −3.56 | 0.000 | |
−0.101 *** | 3.75 | 0.000 | −0.067 *** | 4.83 | 0.000 | |
0.126 *** | 3.81 | 0.000 | 0.041 *** | −4.12 | 0.000 | |
0.117 *** | 5.20 | 0.000 | 0.021 *** | 4.33 | 0.000 | |
−0.055 *** | −3.99 | 0.000 | −0.133 *** | −3.47 | 0.000 | |
0.098 *** | 3.69 | 0.000 | 0.047 *** | 4.91 | 0.000 | |
−0.346 *** | −4.02 | 0.000 | −0.140 *** | −5.16 | 0.000 | |
−0.283 *** | −5.12 | 0.000 | −0.146 *** | −3.74 | 0.000 | |
0.004 *** | 4.18 | 0.000 | 0.017 *** | 4.44 | 0.000 | |
Constant | −1.032 *** | −7.81 | 0.000 | |||
Diagnostic tests | ||||||
Adjusted r-squared | 0.951 | Ramsey RESET test (F) | [0.635] | |||
F-statistics | 37.32 *** | [0.000] | JB test on normality (chi2) | [0.308] | ||
Port. test for SC (chi2) | 1.32 | [0.472] | CUSUM | Stable | ||
BP for hetero test (chi2) | 0.13 | [0.736] | CUSUMSQ | Stable |
Null Hypothesis | Lag Length | Test Statistics | Null Hypothesis | Lag Length | Test Statistics | Bootstrap CV at 1% | Bootstrap CV at 5% | Bootstrap CV at 10% |
---|---|---|---|---|---|---|---|---|
1 + 9 | 10.16 ** | 1 + 9 | 20.21 *** | 14.58 | 9.70 | 7.87 | ||
1 + 9 | 23.44 *** | 1 + 9 | 18.52 *** | 14.58 | 9.70 | 7.87 | ||
1 + 9 | 21.98 *** | 1 + 9 | 15.74 *** | 14.58 | 9.70 | 7.87 | ||
1 + 9 | 28.04 *** | 1 + 9 | 1.99 | 14.58 | 9.70 | 7.87 | ||
1 + 9 | 9.18 * | 1 + 9 | 1.17 | 14.58 | 9.70 | 7.87 | ||
1 + 9 | 10.67 ** | 1 + 9 | 13.65 ** | 14.58 | 9.70 | 7.87 | ||
1 + 9 | 7.44 | 1 + 9 | 19.48 *** | 14.58 | 9.70 | 7.87 | ||
1 + 9 | 5.38 | 1 + 9 | 29.64 *** | 14.58 | 9.70 | 7.87 | ||
1 + 9 | 13.40 *** | 1 + 9 | 18.07 *** | 14.58 | 9.70 | 7.87 |
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Hameed, M.A.; Rahman, M.M.; Khanam, R. Analyzing the Consequences of Long-Run Civil War on Unemployment Rate: Empirical Evidence from Afghanistan. Sustainability 2023, 15, 7012. https://doi.org/10.3390/su15087012
Hameed MA, Rahman MM, Khanam R. Analyzing the Consequences of Long-Run Civil War on Unemployment Rate: Empirical Evidence from Afghanistan. Sustainability. 2023; 15(8):7012. https://doi.org/10.3390/su15087012
Chicago/Turabian StyleHameed, Mohammad Ajmal, Mohammad Mafizur Rahman, and Rasheda Khanam. 2023. "Analyzing the Consequences of Long-Run Civil War on Unemployment Rate: Empirical Evidence from Afghanistan" Sustainability 15, no. 8: 7012. https://doi.org/10.3390/su15087012
APA StyleHameed, M. A., Rahman, M. M., & Khanam, R. (2023). Analyzing the Consequences of Long-Run Civil War on Unemployment Rate: Empirical Evidence from Afghanistan. Sustainability, 15(8), 7012. https://doi.org/10.3390/su15087012