Department of Economics

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Browsing Department of Economics by Subject "ARDL"

Now showing 1 - 3 of 3
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    An analysis of the determinants of private sector investment in Kenya using the autoregressive distributed lag (ARDL) approach
    (2015) Kingori, Batistar M.
    The study sought to analyze the determinants of private investment in Kenya. The problem of ambiguous results of existing studies, mainly stemming from inappropriate econometric methods, called for further study of methodology and empirical model building. Results from numerous studies that have employed autoregressive distributed lag (ARDL) approaches are more likely to be persuasive than their predecessors. Primary objectives of the study were investigation of determinants of private sector investment and determination of the causal relationship between private sector investment and real gross domestic product. Various specific economic indicators were the data type of interest since the study was purely of economic nature. The study used secondary data, sourced from World Bank and International Monetary Fund. An advanced econometric technique, the ARDL model, was employed in data analysis to help in addressing the objectives that the study sought to address. The study found that real Gross Domestic Product (GDP) and trade openness were the main determinants of private investment in the long run. However, in the short run, real GDP remained an important variable in explaining variations in private investment while openness was no longer important switching with inflation which was found to be important. There is a unidirectional causality effect where private investment granger causes real GDP and not vice versa recommending deeper understanding of factors that influence GDP in the long run and short run. Gross domestic product being a major determinant of private sector investment informs and guides policy makers in quest to providing stable macroeconomic conditions in the economy. Moreover, to ensure sustainable economic development it’s upon policy makers to ensure that local industries are protected since the results indicate an inverse relationship between private investment and trade openness which is a proxy to liberalization.
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    Assessing the impact of credit finance on agricultural productivity in Namibia
    (University of Namibia, 2024) Likius, Naemi
    This thesis explores the impact of credit finance on agricultural productivity in Namibia, with the goal of promoting innovative, economically oriented, and modern agriculture to enhance rural living standards and drive food production. The study utilizes the bounds test (ARDL) approach to cointegration, analysing quarterly data from 2001 to 2022 to examine the short-run and long-run dynamics between credit finance and agricultural productivity. The empirical findings indicate that credit finance and prime lending rates have a significant negative impact on agricultural productivity at a 1% level, consistent with prior research. Inflation was found to negatively affect agricultural productivity but was insignificant. The stability of the model was confirmed using the CUSUM of squares, validating the use of the ARDL agricultural gross domestic product function as a target variable. The analysis reveals a unidirectional causality, with agricultural productivity predicting credit. Based on the study's findings, several major policy recommendations are proposed. Firstly, the Namibian government should focus on enhancing the banking sectors to improve farmers' access to credit and financial services, including measures such as financial inclusion, expanded banking services in rural areas, and facilitation of loan availability. Secondly, efforts should be made to develop well-functioning rural loan markets that cater specifically to the agricultural sector, through initiatives such as establishing specialized agricultural financing institutions, providing credit guarantees, and promoting financial literacy programs tailored to the agricultural sector. Thirdly, the development of township banking infrastructure in rural areas can enhance access to financial services and credit for farmers, either through banking branches or mobile banking services. Lastly, short-term and long-term plans should be formulated to support agricultural growth, including enhancing agricultural extension services, promoting technology adoption, improving market access for agricultural products, and strengthening policy and institutional support for the agricultural sector. This study's conclusions emphasize the significant role of credit finance in shaping agricultural productivity and the importance of sustained investment in enhancing productivity over time. The interdependencies among agricultural productivity, credit finance, inflation rate, and prime lending rate underscore the need for a comprehensive understanding of their dynamics
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    Assessing the relationship between foreign investment flows and foreign exchange reserves in Namibia
    (University of Namibia, 2024) Sheefeni, Trofimus N.
    The purpose of this study was to examine the relationship between foreign investment flows (FIF) and foreign exchange reserves (FER) in Namibia for the period of 32 years, from 1991 to 2022, using exchange rate (EXR), real interest rate (RIR), and political stability (POLSTB) as the control variables. The study sought further to determine the nature of the relationship between the variables, as well as the direction of causality. To attain these objectives, the study used macroeconomic time series data and analysed them using various econometrics tools in EViews software, version 9. In detail, the study conducted a unit root test and found the data stationary at mixed orders [I(0) and I(1)]. Thus, the study employed the bound test of cointegration to measure whether the variables are cointegrated in the long-run. The results reveal that a long-run exists between the variables. Therefore, the study applied the ARDL-ECM model to estimate the short-run and long run relationships between the variables. In that light, the results indicate a negative but not statistically significant relationship between EXR and FER in both lags. Against that, the results show a positive but insignificant relationship between RIR and FER, as well as between POLSTB and FER in both lags. Additionally, the results also reveal a positive relationship between FIF and FER, which is significant in lag 2, unlike in lag 1. Finally, the study employed the unrestricted Granger causality test to establish the direction of causality between the variables. The results indicate a unidirectional causality from EXR to FIF, while the rest of the variables are independent of each other. Based on the results, the study recommends that policymakers should enhance foreign investment policies aimed at attracting and retaining foreign investment flows, sustain political stability by implementing effective governance and institutional reforms, and diversify of reserves management to mitigate risks and maximise returns. Finally, the study suggests future research to examine the dynamic impacts of monetary and fiscal policy, assess the effects of global economic trends such as commodity price volatility, and analyse the impact of regional integration agreements on foreign exchange reserves