Simplice A, Asongu (2011): How would population growth affect investment in the future? Asymmetric panel causality evidence for Africa. Forthcoming in:
Download (198kB) | Preview
Our generation is experiencing the greatest demographic transition and Africa is at the center of it. There is mounting concern over rising unemployment and depleting per capita income accruing there-from. We look at the issue in this paper from a long run perspective by examining the nature of the relationship between population growth and a plethora of investment indicators: public, private, foreign and domestic investments. Using asymmetric panels on data spanning from 1977 to 2007, we investigate effects of population growth on investment from Granger causality models. Our findings reveal a long-run positive causal linkage from population growth to only public investment. But for domestic investment, permanent fluctuations in human capital affect changes in other forms of investments. Not unexpected, no significant short-run causal relationship is found. For economic implications, sampled countries should take family planning and birth control policies seriously. Though growth in population may appear not to have an impact on investment in the short spell, in the distant future, it strangles public finances. Therefore measures should be adopted such that, rising unemployment rate resulting from population growth be accommodated by private sector investments. Seemingly, structural adjustments policies implemented by sampled countries have not had the desired investment effects.
|Item Type:||MPRA Paper|
|Original Title:||How would population growth affect investment in the future? Asymmetric panel causality evidence for Africa.|
|Keywords:||Productivity, investment, human capital, asymmetric panel, causality, Africa|
|Subjects:||O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General
J - Labor and Demographic Economics > J0 - General > J00 - General
C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models
O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
|Depositing User:||Simplice Anutechia Asongu|
|Date Deposited:||12. Apr 2011 01:12|
|Last Modified:||11. Feb 2013 18:26|
Azomahou, T., & Mishra, T. (2008). “Age dynamics and economic growth: Revisiting the nexus in a nonparameric setting”. Economic Letters, 99, pp.67-71.
Camarero, M., & Tamarit, C. (2002). “A panel cointegration approach to the estimation of the peseta real exchange rate”. Journal of Macroeconomics 24, pp.371-393.
Dangote Group. (2008). “18th World Economic Forum on Africa Report” , Financial Nigeria Magazine(June edition).
Dickey, D.A., & Fuller, W.A. (1979). “Distributions of the estimators for autoregressive time series with a unit root”. Journal of the American Statistical Association, 74, pp.427-31.
Engle, R.F. & Granger, C.W.J. (1987). “Cointegration and Error-Correction: Representation, Estimation, and Testing”. Econometrica 55 (March), pp. 251-276. Gries, T., Kraft, M., & Meierrieks, D. (2009). “Linkages between financial deepening, trade openness, and economic development: causality evidence from Sub-Saharan Africa”. World Development, 37(12), pp.1849-1860. Hasan, M. S. (2010). “The long-run relationship between population and per capita income growth in China”. Journal of Policy Modeling, 32, pp.355-372. Hondroyiannis, G., & Papapetrou, E. (2005). “Fertility and output in Europe: new evidence from panel cointegration analysis”. Journal of Policy Modeling, 27, pp.143-156.
Im, K.S., Pesaran, M.H., & Shin, Y. (2003). “Testing for unit roots in heterogeneous panels”. Journal of Econometrics, 115, pp.53-74.
IMF (2009). “Africa needs investment, not aid”. IMF Survey (April)
Kao, C. (1999). “Spurious regression and residual-based tests for cointegration in panel data”. Journal of Econometrics, 90, pp.1–44.
Kao, C., & Chiang, M.-H. (2000). “On the estimation and inference of a cointegrated regression in panel data”. Advances in Econometrics, 15, pp.179-222.
Khim, V., & Liew, S., (2004). “Which lag selection criteria should we employ?”. Economics Bulletin, 3(33), pp.1-9.
Levin, A., Lin, C.F., & Chu, C.S. (2002). “Unit root tests in panel data: asymptotic and finite-sample properties”. Journal of Econometrics, 108, pp.1-24.
Maddala, G.S., & Wu, S. (1999). “A comparative study of unit root tests with panel data and a new simple test”. Oxford Bulletin of Economics and Statistics, 61, pp.631-52.
Pedroni, P. (1999). “Critical values for cointegration tests in heterogeneous panels with multiple regressors”. Oxford Bulletin of Economics and Statistics, Special Issue, pp.653-670.
Pedroni, P. (2000). “Fully modified OLS for Heterogeneous cointegrated panels”. Advances in Econometrics, 15, pp.93-130.
Pedroni, P. (2001). “Purchasing power parity tests in cointegrated panels”. Review of Economics and Statistics, 83, pp.727-731.
Pommeret, A., & Smith, W. T. (2005). “Fertility, volatility and growth”. Economics Letters 87, pp.347-353.
____________ (2009). “Worlds Population Prospects”. United Nations.
Available Versions of this Item
How would population growth affect investment in the future? Asymmetric panel causality evidence for Africa. (deposited 27. Feb 2011 06:46)
- How would population growth affect investment in the future? Asymmetric panel causality evidence for Africa. (deposited 12. Apr 2011 01:12) [Currently Displayed]