Theoretical and Applied Economics
No. 8 / 2013 (585)
The causal relationship between Foreign Direct Investment and Current Account: an empirical investigation for Pakistan economy
Karachi University Business School, University of Karachi, Pakistan
Mohsin Hasnain AHMAD
Applied Economics Research Centre, University of Karachi, Pakistan
Muhammad ASIM
Karachi University Business School, University of Karachi, Pakistan
Abstract. This paper investigates relationship between FDI and current account (CA) in Pakistan using the Johansen-Juselius cointegration technique and the Granger causality test. The study results indicate that FDI and CA are cointegrated and thus exhibit a reliable long run relationship. The Granger causality test findings indicate that the causality between FDI and CA is uni-directional. However, there is no short run causality from FDI to CA and vice versa. Therefore, as a policy implication that FDI inflows may cause to the deterioration of the balance of payments in the long run should be taken into account when policy makers decide to implement policies to attract foreign investors.
Contents
A regional model for labour demand in Romania
Romania’s accession to the Eurozone – a simulation using a simple DSGE model
Occupational mobility networks of female and male higher education graduates
Creating competitive poles – the sustainable model for obtaining the competitive advantage
Financial development and economic growth in Central and Eastern Europe
Neoclassical economic orthodoxy and the need for a new post-crisis economic paradigm
Territorial analysis of discriminated groups
The causal relationship between Foreign Direct Investment and Current Account: an empirical investigation for Pakistan economy
Interdependence between labor market and unemployment in the post-crisis economy
The internet is changing our world
Improvement of labor flexibility in Romanian companies using practices in the field in some EU countries
International monetary system – between crisis and reform