Girijasankar Mallik and Shrabani Saha
This paper investigates the corruption-growth relationship in a sample of 146 countries for the period – 1984-2009. While negative effects of corruption on growth have drawn…
Abstract
Purpose
This paper investigates the corruption-growth relationship in a sample of 146 countries for the period – 1984-2009. While negative effects of corruption on growth have drawn economists’ interest in recent years, our main contribution is to examine the effects by employing the hierarchical polynomial regression to evaluate the relationship after controlling economic and institutional factors.
Design/methodology/approach
The results are estimated using panel generalized methods of moments.
Findings
The results challenge some of the findings that negative growth-corruption association in the literature but also provide some new inferences. The findings reflect that corruption is not always growth-inhibitory; for some countries it is growth-enhancing, which supports the “greasing-the-wheels” hypothesis.
Originality/value
The paper investigates the growth-corruption relationship using panel generalised methods of moments. Our results suggest that a cubic function best fitted the data. The finding suggests that in the medium corrupt countries corruption stimulates growth by reducing red-tape.
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Girijasankar Mallik and Anis Chowdhury
The purpose of this paper is to determine the relationship between inflation, inflation uncertainty, growth and growth uncertainty for Australia.
Abstract
Purpose
The purpose of this paper is to determine the relationship between inflation, inflation uncertainty, growth and growth uncertainty for Australia.
Design/methodology/approach
Multivariate EGARCH models has been used to estimate the relationship between inflation, inflation uncertainty, growth and growth uncertainty for Australia.
Findings
Using quarterly data in multivariate EGARCH models, this study finds that both inflation uncertainty and output uncertainty have negative and significant effects on output growth. The paper also finds that, while inflation uncertainty has a positive and significant effect on inflation, output uncertainty has a negative and significant effect on inflation. The study uses a newly constructed oil price dummy as a control variable and finds that oil price changes significantly increase inflation uncertainty. The study also finds that inflation uncertainty and the inflation level have both declined since the adoption of a formal inflation‐targeting monetary policy in Australia.
Research limitations/implications
Multivariate EGARCH model can be used to estimate the effects of inflation, inflation uncertainty, growth and growth uncertainty for cross‐country analysis.
Originality/value
This is the first study of the effect of inflation uncertainty and growth uncertainty on inflation and growth in Australia using a newly constructed oil price dummy in a multivariate EGARCH framework.
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Girijasankar Mallik and Anis Chowdhury
This paper examines the relationship between inflation and real income in Australia, Canada, Finland, New Zealand, Spain, Sweden and the UK which have adopted a “formal” policy of…
Abstract
This paper examines the relationship between inflation and real income in Australia, Canada, Finland, New Zealand, Spain, Sweden and the UK which have adopted a “formal” policy of low or zero inflation target. Using cointegration analysis and a vector error correction model (VECM)), we find that the long‐run relationship between inflation and real income is positive in most cases. We further find that contrary to the belief of new‐classical economics, government expenditure too is positively related to real income in the long‐run.
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Girijasankar Mallik and Ramprasad Bhar
The purpose of this paper is to establish a link between inflation uncertainty and interest rates for five inflation‐targeting countries.
Abstract
Purpose
The purpose of this paper is to establish a link between inflation uncertainty and interest rates for five inflation‐targeting countries.
Design/methodology/approach
The approach takes the form of a time‐varying parameter model with a Generalized Autoregressive Conditional Heteroskedasticity (GARCH) specification, used to derive impulse uncertainty and structural uncertainty.
Findings
This study attempts to establish a link between inflation uncertainty and interest rates for five inflation‐targeting countries, i.e. Canada, Finland, Spain, Sweden, and the UK. Decomposing inflation uncertainty into two components – impulse and structural, a positive association was found between the expected inflation and interest rates. Structural uncertainty has a positive and significant effect on interest rates for some countries. It has also been found that the long‐run effects of inflation on interest rates are less than unity for the post‐inflation targeting period, which implies that in some respect the Central Bank has been successful in targeting inflation. This has allowed the Central Bank to employ a less restrictive monetary policy in an environment of a credible inflation‐targeting strategy.
Research limitations/implications
Exponential Generalized Autoregressive Conditional Heteroskedasticity (EGARCH) can be used instead of GARCH modelling.
Originality/value
This is the first study that has tried to establish the link between different types of inflation uncertainty and interest rates for the inflation‐targeting countries to see the effect of inflation targeting.