Search Results (319)

This study examines the long- and short-run effects of sustainable development, economic growth, energy consumption, urbanization, investment and trade openness on Carbon Dioxide Emissions (CO₂) in the GCC countries utilizing the PMG-ARDL approach by including the data spanning from 2000 to 2022. In the short -run, the sustainable development index demonstrates a positive and substantial impact while it exhibits adverse long-run impact on CO₂ emission. The study also indicates a U-shaped correlation between economic growth and emissions, contrasting with the conventional Environmental Kuznets Curve (EKC) where economic growth at lower income levels often leads to a reduction in emissions; however, income increases beyond around USD 29,942 per capita correlate with higher emissions. Besides, energy use is identified as the primary factor influencing emissions, reflecting global patterns that indicate greater energy usage, particularly from fossil fuels directly boosts emissions. Moreover, the urbanization intensifies this problem, resulting in higher energy demand and greater emissions. Additionally, the study finds that gross capital formation and investments in infrastructure contribute to emissions in the short run, though these effects diminish over time. Our results are robust as it similar to the outcomes obtained from dynamic panel-data System GMM. The GCC policymakers must utilize the sustainable development framework to legally mandate national planning towards low-carbon paths while balancing for short-term transition costs with significant long-run emission reductions. This necessitates the implementation of market-oriented carbon pricing to address the post-threshold U-shaped emissions rebound, the systematic elimination of fossil fuel subsidies to promote renewable energy adoption, and the enforcement of sustainable development regulations to mitigate urbanization pressures. Full article

This study empirically aims to analyze the impact of primary monetary policy stance and transmission mechanisms of the European Central Bank (ECB)—such as the total assets of the ECB, long-term interest rate based on the government bond yields, and the EURUSD exchange rate—on major volatile cryptocurrencies like Bitcoin and Ethereum, as well as the leading stablecoin Tether. To this end, the study employs the linear Autoregressive Distributed Lag (ARDL) and the Bootstrap ARDL (BA-ARDL) procedures, robust approaches with limited data in time series analysis. The dataset consists of monthly data over the period from January 2019 to December 2025. We summarize the novel and robust primary empirical results of our study as follows: First, (i) it is revealed that the ECB’s balance sheet expansion has encouraged Bitcoin and Ethereum, yet has also, to a limited extent, suppressed Tether. Secondly, (ii) while the ECB’s long-term interest rate negatively impacts the prices of Bitcoin, Ethereum, and Tether, the negative impact on Tether is relatively weaker. Finally, (iii) the EURUSD exchange rate positively affects Ethereum, while its effect on Bitcoin is not statistically significant. On the other hand, at a 10% significance level, EURUSD has a weak negative effect on Tether. In conclusion, the empirical evidence demonstrates that the primary monetary policy stance and transmission mechanisms of the ECB influence the leading digital assets in distinct ways. Taking our findings into account is crucial for designing the digital euro in terms of financial stability and regulatory framework. Finally, we offer sound policy implications for the ECB based on empirical findings. Full article

Environmental degradation has intensified alongside rising carbon emissions driven by economic expansion, energy consumption, and transport activities. In recent decades, Middle Eastern economies have experienced substantial growth in tourism, trade openness, and energy use, raising concerns about their environmental consequences. This study investigates the impact of tourism activity, energy consumption, and trade openness on transport-related CO₂ emissions in ten Middle Eastern countries over the period 2000–2020. Data were obtained from the World Development Indicators (WDI) database of the World Bank. Using a panel autoregressive distributed lag (ARDL) framework, the analysis captures both short-run dynamics and long-run equilibrium relationships. To improve measurement robustness, tourism activity is proxied using two alternative indicators: international tourism expenditures (TEs) and international tourism receipts (TRs). The empirical results indicate that tourism activity and energy consumption significantly increase transport-related CO₂ emissions in both the short and long run, while trade openness does not exert a statistically significant long-run effect. These findings suggest that tourism expansion and energy-intensive transport systems are key contributors to environmental pressure In the region, whereas the environmental impact of trade may be indirect or conditional. The study highlights the importance of integrating sustainable tourism policies and improving energy efficiency. In addition, it underscores the need to develop low-carbon transport strategies to support environmentally sustainable economic development in Middle Eastern economies. Full article

The concept of virtual water is currently one of the most important issues in water resource management, especially in a context marked by structural water scarcity. Beyond the analysis of virtual water flows, which has been widely studied in the literature, this study aims to better understand the relationship between virtual water exports and economic growth. This paper analyzes the dynamic relationship between Morocco’s economic growth and agricultural virtual water exports to the European Union over the period of 1986–2023. An ARDL model was used based on annual data to test cointegration and estimate short- and long-term effects, controlling for gross fixed capital formation and agricultural value added. The bounds test confirms the existence of a stable long-term relationship between the variables. The results suggest that export specialization may be associated with foreign earnings and agricultural activity while also coinciding with greater pressure on resources and potential adaptation costs, especially for blue water resources. However, estimates indicate that in the long term, investment is positively and significantly associated with growth, while virtual water exports are associated with a negative effect on GDP, suggesting that export gains may be offset by increasing water constraints and sectoral trade-offs, and that agricultural value added mainly influences short-term dynamics. The results highlight the importance of integrating water footprint and virtual water trade concepts, as well as climate constraints, into agricultural and trade strategy planning while strengthening policies on water efficiency, innovation, and governance. Full article

This study examines the dynamic relationships among oil prices, monetary conditions, and nominal GDP growth in Saudi Arabia, with particular attention to short-run adjustment and long-run equilibrium patterns in an oil-dependent economy operating under a fixed exchange-rate regime. Rather than identifying structural monetary policy shocks, the study focuses on reduced-form dynamic associations between market-based monetary indicators, oil-price movements, and nominal economic activity. Using a high-frequency monthly dataset covering key macroeconomic variables, the analysis employs the Autoregressive Distributed Lag (ARDL) framework to estimate both short-run dynamics and long-run equilibrium relationships. An Error Correction Model (ECM) is used to capture the speed of adjustment toward equilibrium, while Granger causality tests assess short-term predictive linkages. The empirical results reveal that monetary indicators, particularly interest rates and money supply, exhibit lagged and non-monotonic associations with nominal GDP growth, reflecting delayed transmission under exchange-rate constraints. Oil-price movements emerge as a dominant driver, showing strong contemporaneous and lagged associations with growth, whereas inflation and exchange-rate movements display limited short-run predictive relevance. The ECM results indicate relatively rapid convergence toward long-run equilibrium, suggesting efficient adjustment dynamics. Granger causality findings further confirm the short-term predictive content of key macroeconomic variables. By integrating high-frequency data with ARDL–ECM estimation, VAR-based robustness checks, and sensitivity analysis, the study provides evidence on how oil-price movements, liquidity conditions, and interest-rate dynamics jointly shape growth fluctuations in Saudi Arabia. Full article

Vehicle sales constitute an important component of household consumption and a key transmission channel of macro-financial conditions in South Africa. This study investigates the macroeconomic determinants of vehicle sales by examining the roles of economic activity, interest rates, and inflation over the period 2000Q1 to 2025Q4. Using quarterly data, the analysis employs the autoregressive distributed lag (ARDL) bounds testing approach to estimate both long-run and short-run relationships, complemented by an error correction model and Granger causality analysis. The results confirm the existence of a stable long-run cointegrating relationship among the variables. In the long run, vehicle sales respond positively to economic growth, while inflation and interest rates are associated with reduced demand. Short-run dynamics indicate that vehicle sales respond positively to economic growth, and negatively to interest rates and inflation, reflecting affordability and credit constraints, alongside rapid adjustment to macroeconomic shocks. The Granger causality results suggest that vehicle demand is largely driven by macro-financial conditions rather than exerting feedback effects on them. Overall, the findings highlight the sensitivity of South Africa’s automotive sector to macroeconomic stability and underscore the importance of prudent monetary policy and price stability in sustaining durable goods demand. Full article

Periods of geopolitical uncertainty have increasingly shaped the performance of global financial markets, yet the extent to which these risks influence the co-movement of asset markets in South Africa remains unclear. Although co-movement has emerged as a crucial factor for investors seeking portfolio diversification, existing studies present mixed findings, with some suggesting that geopolitical risk strengthens financial integration, defined as the extent to which markets move together in response to global shocks, while others find that it weakens these linkages by triggering market segmentation. Against this backdrop, this study examines the impact of geopolitical risk’s influence on the co-movement of South African asset markets, focusing on how shifts in global uncertainty interact with local market dynamics. Using time-series monthly data from December 2004 to January 2025, the study applies a dual-method approach. The multivariate generalised autoregressive conditional heteroskedasticity asymmetric dynamic conditional correlation (MGARCH-ADCC) model is first employed to estimate time-varying correlations across the equity, bond, and property markets. Thereafter, the autoregressive distributed lag (ARDL) model is used to assess both the short- and long-run effects of geopolitical risk on these co-movement patterns. The results indicate that geopolitical risk significantly increases co-movement between South African asset markets in both the short and long run, thereby diminishing the traditional benefits of diversification. These findings reinforce the view that market participants respond collectively to uncertainty rather than fundamentals. Overall, the study contributes to the empirical understanding of market integration under geopolitical stress and highlights the need for investors and policymakers to incorporate geopolitical risk indicators into investment and policy frameworks to strengthen market resilience. Full article

Tourism is an important driver of regional development, yet its benefits remain uneven across destinations despite continued infrastructure investment. This study examines how economic infrastructure affects domestic tourism performance across Indonesian provinces and whether destination risk moderates this relationship. Using a balanced panel of 34 provinces from 2018 to 2024, the study applies a panel ARDL–PMG approach to distinguish short-run adjustments from long-run equilibrium effects. Domestic tourism performance is measured by domestic tourist trips and average domestic tourist expenditure per trip. Economic infrastructure is represented by energy infrastructure, transport infrastructure, and basic digital access, while destination risk is captured through crime and corruption indicators. Inflation and the COVID-19 shock are included as control variables. The findings show that infrastructure improves domestic tourism performance mainly in the long run, with limited short-run effects. However, these benefits are not uniform. Higher levels of crime and corruption weaken the positive effects of infrastructure on both tourist volume and expenditure. The study contributes to tourism and hospitality research by showing that the infrastructure–tourism relationship is dynamic, conditional, and institutionally embedded. The findings imply that infrastructure development should be accompanied by stronger public safety, governance quality, and sustainable destination management. Full article

This paper is an investigation into the degree to which regulatory quality and economic policy uncertainty influence loan performance in 15 Sub-Saharan African countries. The data for the study were drawn from the International Monetary Fund (IMF), World Bank and Federal Reserve Bank of St. Louis, covering the period 2008Q1–2024Q4. Using quarterly panel data, we employ a Panel autoregressive distributed lag (PARDL) with the addition of a Quantile ARDL (QARDL) approach to account for non-homogeneous effects of different levels of non-performing loans. Empirical feedback reveals that sound and effective regulatory quality substantially reduces non-performing loans, most especially in fragile financial regimes. Also, it was established that monetary and fiscal and economic policy uncertainty always enhances non-performing loans, especially during stress conditions, and this is an indication of the asymmetric state-dependent nature of the policy risk in the weak banking systems. The study concludes that increasing the quality of the regulatory system should be a key objective of financial sector reforms in Sub Saharan Africa (SSA). In addition, there is a need for regional coordination, such as regulatory harmonization and policy signalling, between countries in SSA, to reduce cross-border spillover effects and increase financial stability in a more interdependent financial system. Full article

This study aims to examine the relationship between financial development, innovation, and economic growth in Saudi Arabia over the period 1989–2023. Using the Autoregressive Distributed Lag (ARDL) approach, the study investigates both the short-run and long-run dynamics among gross domestic product (GDP), broad money, and patent activity. The empirical findings indicate that innovation, measured through patent activity, has a positive and significant effect on long-term economic growth, highlighting the importance of technological progress and knowledge creation in supporting economic performance. Financial development also contributes positively to growth, although its impact remains relatively moderate. In contrast, the results reveal a negative relationship between financial development and patent activity, suggesting potential inefficiencies in directing financial resources toward innovation-oriented sectors. In addition, causality tests confirm the existence of significant interactions among the variables. The study contributes to the literature by providing empirical evidence from Saudi Arabia within the context of ongoing economic transformation and diversification policies. The findings offer important implications for policymakers seeking to strengthen innovation capacity and improve the efficiency of financial resource allocation to support long-term economic growth. Full article

This paper examines the macroeconomic determinants of government debt in two small open economies with distinct institutional frameworks—Armenia and Slovenia. The analysis focuses on key fiscal variables (budget balance and GDP growth) and monetary factors (inflation and interest rates). Using quarterly data for the period 2004–2025 and an Autoregressive Distributed Lag (ARDL) approach, the results provide robust evidence of cointegration between government debt and its macroeconomic drivers. The findings reveal distinct debt dynamics across the two countries. In Armenia, debt is predominantly growth-driven: higher GDP growth significantly reduces debt levels, while rising interest rates increase debt burdens, with fiscal balance and inflation showing limited long-run significance. In contrast, Slovenia’s debt dynamics are shaped by Eurozone-constrained monetary and fiscal conditions, inflation persistence, and accession-related structural shifts. While GDP growth, fiscal balance, and inflation have only marginal long-run effects, short-run dynamics are influenced by inflation persistence and the structural impact of Euro adoption. Error-correction mechanisms confirm stable long-run convergence in both models. The results highlight that debt sustainability in small open economies is highly context-dependent, reflecting the interaction between macroeconomic fundamentals and institutional constraints. The study contributes to the literature by offering a comparative ARDL-based analysis and by distinguishing between growth-driven and institution-driven debt regimes, while also providing policy-relevant insights for balancing growth, fiscal discipline, and institutional compliance. Full article

This study empirically investigates the impact of exchange rate volatility on foreign direct investment inflows to India from 1990 to 2023, addressing a crucial dimension of macroeconomic stability in emerging economies. Recognizing that currency fluctuations significantly influence multinational corporations’ investment decisions, understanding this impact is vital for effective economic policy. Utilizing annual time series data from the Reserve Bank of India and the World Bank, the study employs the Quantile Autoregressive Distributed Lag (QARDL) modeling framework to capture both short-run and long-run dynamics. Unlike conventional mean-based estimators, the QARDL framework captures heterogeneous effects across different points of the FDI distribution, allowing for a more comprehensive understanding of how macroeconomic factors influence investment under varying economic conditions. The empirical results reveal significant asymmetries in the relationship between exchange rate fluctuations and FDI inflows. In the long run, exchange rate depreciation positively influences FDI inflows, particularly at the median and upper quantiles of the FDI distribution, suggesting that currency competitiveness becomes more important when investment inflows are already moderate or strong. In contrast, the exchange rate effect is statistically insignificant at lower quantiles, indicating that currency movements alone are insufficient to attract foreign investment when inflows are weak. These results offer valuable empirical insights for policymakers seeking to enhance macroeconomic resilience and promote long-term capital inflows in developing countries. Full article

This study investigates the short-term and long-term impacts of gross domestic product (GDP), inflation, foreign capital flows, trade balance and interest rate on stock market performance in Saudi Arabia for the period 1990–2023. The autoregressive distributed lag (ARDL) approach and error correction model (ECM) are employed to empirically examine the short-run and long-run relationships. The ARDL-ECM technique is effective for analyzing cointegration and assessing adjustment processes. Additionally, impulse response function (IRF) analysis based on the vector autoregression (VAR) model, estimated using these macroeconomic indicators, is applied in this paper. This study provides novel insights and addresses emerging gaps in the literature concerning Saudi Arabia as a developing economy. The long-term relationship in the bounds test results confirms its existence. In the long run, inflation and interest rate exert a statistically significant negative effect on stock market performance, while the trade balance has a significant positive impact. GDP and foreign capital inflows do not exhibit statistically significant long-run effects. Short-run dynamics indicate persistence in stock market performance along with significant effects from inflation and interest rate changes, while GDP and foreign capital inflows remain statistically insignificant in the long-run scenario. Forecast error variance decomposition (FEVD) results show that approximately 68.5% of the variation in market performance is explained by its own shocks, followed by foreign capital flows (16.3%) and inflation (8.4%). While foreign capital flow does not exhibit statistical significance in the ARDL long-run estimates, its contribution in variance decomposition highlights its role as an important source of external shocks. These findings are relevant to various stakeholders, including investors and policymakers. Additionally, policy emphasis should be placed on controlling inflation and maintaining stable interest rates while improving trade balance conditions. Although foreign capital flow does not show a direct long-run effect, its role in influencing market variability suggests the need for a stable and well-regulated investment environment. Full article

This study examines the dynamic relationship between exchange rates and stock returns in Taiwan, focusing on asymmetry and time-varying dependence. Using monthly and daily data from 1994 to 2024, we employ ARDL, NARDL, and error correction models (ECM), together with a time-varying copula framework. We contribute to the literature in three ways. First, we provide a unified framework that jointly captures long-run equilibrium, short-run dynamics, and nonlinear dependence. Second, we document robust asymmetric effects, showing that currency depreciation stimulates stock returns, whereas appreciation exerts adverse effects, reflecting Taiwan’s export-oriented economic structure. Third, we show that the dependence between exchange rates and stock returns is time-varying and highly persistent. Overall, the findings highlight the importance of nonlinear and time-varying approaches in understanding exchange rate–stock market interactions and offer important implications for investors and policymakers. Full article

This study investigates the relationship between energy indicators and human development in South Africa over the period 1980–2023, employing a quantitative research design. Using secondary annual time-series data, the study examines the effects of electricity generation, per capita energy consumption, Oil-related fiscal revenue share as a share of total government revenue, and total energy consumption on the Human Development Index. The Autoregressive Distributed Lag (ARDL) bounds testing approach is employed to assess long-run and short-run relationships, complemented by Error Correction Models (ECM) to capture dynamic adjustments. Unit root and stability tests, including CUSUM and CUSUMSQ, ensure the robustness of the estimations, while Granger causality tests explore predictive linkages among variables. The findings reveal a positive long-run relationship between electricity generation and total energy consumption with human development, highlighting the importance of reliable and broad-based energy utilisation for enhancing welfare outcomes. In contrast, per capita energy consumption and Oil-related fiscal revenue share exhibit negative long-run effects, suggesting inefficiencies in energy use and the fiscal risks associated with reliance on oil-related government revenue. Short-run dynamics indicate that temporary adjustments, such as infrastructure expansion and transitional fiscal spending, can produce immediate but contrasting effects on human development. Granger causality analysis identifies unidirectional predictive relationships from electricity generation and Oil-related fiscal revenue share to human development, while total energy consumption exhibits weak bidirectional causality. Diagnostic tests confirm the model’s reliability and parameter stability over the study period. The results imply that energy policies in South Africa should prioritise efficient and inclusive energy use, ensure effective allocation of energy-related fiscal resources, and complement energy system improvements with broader socio-economic interventions. This study contributes to the understanding of the energy–development nexus in emerging economies, offering evidence-based insights for policymakers seeking sustainable human development. Future research could extend the analysis to provincial or sectoral levels, consider emerging energy technologies, and explore alternative development proxies to capture more nuanced socio-economic dynamics. Full article