Monetary policy transmission mechanism in Samoa

In recent years, Samoa has emerged to be the most successful economy amongst all Pacific island countries. Its achievements of low inflation and high growth rates were due to sustained fiscal adjustment and appropriate monetary policy measures. This paper undertakes an empirical study of transmission mechanism of monetary policy by adopting a VAR approach and using quarterly data over a 17-year period (1990-2006). The study findings are that money and exchange rate channels are important channels in transmitting monetary impulses to Samoa’s real sector, followed by credit and interest rate channels

Foreign Direct Investment and Employment Creation in Pacific Island Countries: An Empirical Study of Fiji

This paper undertakes an econometric study of the impact of FDI in Fiji during a 30-year period. In the absence of data on Fiji’s employment in FDI sectors either in aggregated form or by specific sectors, we are constrained to use data on formal sector employment as a proxy. This implies that employment in both formal and FDI related activities move in the same direction and proportion. The paper investigated the relationship between employment and foreign direct investment for Fiji through a multivariate modeling strategy by including GDP.Foreign Direcit Investment, Employment creation, Fiji

ROLE OF ICT AS A CONTINGENCY FACTOR IN FINANCIAL SECTOR DEVELOPMENT, REMITTANCES, AND ECONOMIC GROWTH NEXUS: AN EMPIRICAL STUDY OF INDONESIA

This study examines the role of ICT as a factor in Indonesia’s financial sector development, remittances, and economic growth nexus using annual data from 1984-2017. We use the bounds testing procedure based on the Autoregressive Distributed Lag framework and the neoclassical growth model. The findings of the study reveal that ICT has indeed emerged as a significant factor in the remittance-growth nexus by playing a complementary role in financial sector development. The policy implication is that ICT needs to be supported at all levels and the financial inclusion process should be carried forward as it has all the potential to speed up economic growth and development.This study examines the role of ICT as a factor in Indonesia’s financial sector development, remittances, and economic growth nexus using annual data from 1984-2017. We use the bounds testing procedure based on the Autoregressive Distributed Lag framework and the neoclassical growth model. The findings of the study reveal that ICT has indeed emerged as a significant factor in the remittance-growth nexus by playing a complementary role in financial sector development. The policy implication is that ICT needs to be supported at all levels and the financial inclusion process should be carried forward as it has all the potential to speed up economic growth and development

Do Foreign Aid and Remittance Inflows Hurt Competitiveness of Exports of Pacific Island Countries? An Empirical Study of Fiji

Foreign aid and remittance inflows have been playing major roles in the economic growth and development of Pacific island countries (PICs). However, the relationship between these international capital inflows and export competitiveness of PICs has not been adequately studied. It is generally held that such capital transfers tend to hurt exports, a phenomenon known as Dutch disease. The objective of this paper is to examine the validity of the Dutch disease hypothesis in PICs with a case study of Fiji. Employing the bounds testing procedure, this empirical study reveals that inflows of both foreign aid and remittances have been contributing to the appreciation of Fiji’s currency. The study establishes the validity of the Dutch disease hypothesis as far as Fiji is concerned. Keywords: Foreign aids, remittances, export competitiveness, cointegration, Granger causality tes

Did Fiji’s Budget Deficit Support Private Investment? Some Empirical Evidence:1982-2011

Ever since the two coups in 1987, Fiji’s domestic investment climate has continued to remain uncertain. Aside from the lingering effects of these two coups, their re-occurrences of coups in 2000 and 2006 resulted in further setbacks. Against this background, government has been pushing hard to promote public expenditure not only to make up for the deficiency caused by private investment but also for promoting growth enhancing public infrastructure investment in the face of stagnant revenues. This paper looks at the relationship between the resultant budget deficits and private investment in a multivariate framework. The study findings are that budget deficits as such did not support private investment. The paper indicates the need for further research in regard to components of public expenditure

Determinants of non - performing assets of commercial banks in India: an econometric study

Gross non-performing assets (NPA) as a proportion of gross assets of India’s commercial banks in the public and private sectors as well in banks owned by foreign interests have been rising for the past few years. Gross NPAs of all commercial banks, as a proportion of total assets are 10.8%, as of March 2018. In the case of the public sector banks, which dominate the banking sector with a share of 70% of business, the gross NPA as percent of total assets is 14.5%. This paper is an empirical studyfocuses on causal factors, which are macroeconomic as well as bank specific that influences NPA. We employ the Autoregressive Distributed Lag (ARDL) procedure and conduct Bounds F- Tests, by using sixty quarterly observations (fiscal years 1999-2000 to 2015-16) to explore the effects of these determinants. The study findings reveal that real GDP, gross advances, total expenditures and price level are important determinants of NPA in India’s commercial banks

Investigating asymmetry in tourism and growth relationship in the Pacific Island countries: any lessons for policy makers?

The global economy has been devastated by the Covid-19 pandemic, which began in the first quarter of 2020. The unprecedented damages in terms of loss of lives, livelihoods, and interruptions in international travel have caused deep contractions in small islands and developing countries, which are known for their dependency on tourism. This paper empirically examines the relationship between tourism and economic growth in the selected Pacific Island Countries (PICs). Adopting a panel nonlinear autoregression distributed lagged (NARDL) approach, we account for potential nonlinearities in the relationship and empirically determine the asymmetric response of per capita GDP to positive and negative tourism shocks. Our analysis depicts that tourism and per capita GDP have a significant asymmetric relationship. The estimates show that a decrease in tourism earnings has a larger negative impact on economic growth when compared to the positive outcome of the same size rise in tourism earnings. The negative impact of tourism is also found to be more pronounced in the long run. The results are robust to different tourism indicators and sub-sample periods. ICT and the financial market as control variables have a significant positive effect on economic growth. The study findings have some policy implications for PICs

Impact of Covid-19 pandemic on remittance inflow - economic growth - nexus in India: lessons from an asymmetric analysis

The relentless spread of the Covid-19 pandemic from the first quarter of 2020 and the emergence of new variants since early 2021 have caused a steep decline in economic activities in all countries. The forecast by international agencies including World Bank is that remittances (REM) on a global scale would decline by 20 percent in 2021; and to South Asia in particular would decrease by 25 percent. India, a low-middle-income country, which has been among the top ten REM recipient countries, is expected to be adversely affected much more. This study examines the asymmetric effects of REM on India’s per capita GDP by using a nonlinear methodology. Additionally, factors like ICT and the financial sector are considered in an extended version of the remittance-growth relationship. The study findings reveal that the impact of the negative partial sum of decomposition of REM is higher than the impact of positive partial sum decomposition of REM, implying a greater adverse effect of declining remittances on per capita GDP growth. The findings are expected to be of substantial importance in designing appropriate policies that affect economic growth through the interaction of remittances with ICT, and financial markets

Tourism and economic growth nexus in Maldives: asymmetric analysis and role of ICT

The relentless spread of the Covid-19 pandemic, which began in the first quarter of 2020, aided by the periodical emergence of new variants, is continuing to inflict unprecedented damages on the global economy. Interruptions in international travel have led to the collapse of the tourism-related service industry, which is the backbone of the economies of many small islands and developing states. This paper focuses on the Maldives, an island nation in the Indian Ocean, which is one of the top ten most tourism-dependent economies. Adopting the Solow production function, the paper examines the tourism and economic growth relationship using nonlinear autoregressive distributed lag (NARDL) methodology. The analysis shows that tourism earnings and economic growth have a significant asymmetric relationship. The result further reveals that the magnitude of the negative impact of the decline of a given size in tourism earnings on growth is of much larger magnitude than that of the positive impact of the same size rise in tourism earnings. The negative impact of tourism is found to be more pronounced in the long run. ICT spread, measured by the rise in mobile subscriptions, is positively associated with growth and has emerged as a significant contingent factor. We suggest policy measures to step up the recovery progress and growth

Does external debt lead to economic growth in Pacific island countries

With the change in donors’ priorities since the end of the Cold War in the late 1980s, there has been a decline in annual aid inflows to Pacific island countries (PICs), which have been among the world’s top recipients of aid per capita in the past. Along with fall in aid inflows, growing annual domestic budgetary deficits in recent years have forced some PICs to finance them through borrowing. This paper seeks to examine whether external debt contributed to economic growth in PICs by undertaking a study of six major PICs