1 Introduction
2 Related literature
3 Data and methodology
3.1 Data and model
From a policy perspective, of course, the influences of individual elements of globalization on economic policy are important. However, most elements of globalization are highly correlated, so that it is impossible to include them all individually in one regression. Omitting dimensions, on the other hand, causes coefficients to be biased. Using an aggregate indicator of globalization is thus preferable. In any case, only an aggregate measure can be used to study the overall effect of globalization. (p. 401)
3.2 Econometric methodology
3.2.1 Cross-sectional dependency test
3.2.2 Unit root test
3.2.3 Panel cointegration test
4 Findings
Levels | Y | OG | EG | SG | PG |
---|---|---|---|---|---|
CDLM (Breusch and Pagan 1980) | 20.16** (0.027) | 339.64*** (0.00) | 313.91*** (0.00) | 327.91*** (0.00) | 286.66*** (0.00) |
CDLM (Pesaran 2004) | 2.27** (0.023) | 73.71*** (0.00) | 67.96*** (0.00) | 71.09*** (0.00) | 61.86*** (0.00) |
CD (Pesaran 2004) | 2.41** (0.016) | 18.20*** (0.00) | 17.47*** (0.00) | 17.93*** (0.00) | 16.47*** (0.00) |
LMadj (Pesaran et al. 2008) | 2.21** (0.026) | 73.65*** (0.00) | 67.89*** (0.00) | 71.03*** (0.00) | 61.80*** (0.00) |
Variables | Constant | Constant and trend | ||
---|---|---|---|---|
t bar | P value | t bar | P value | |
Y | − 3.46*** | 0.00 | − 4.17*** | 0.00 |
OG | − 2.55** | 0.03 | − 2.68 | 0.19 |
EG | − 1.61 | 0.66 | − 1.37 | 0.99 |
SG | − 1.90 | 0.39 | − 1.81 | 0.91 |
PG | − 0.91 | 0.98 | − 1.50 | 0.98 |
∆Y | − 5.82*** | 0.00 | − 5.89*** | 0.00 |
∆OG | − 4.03*** | 0.00 | − 4.58*** | 0.00 |
∆EGL | − 3.32*** | 0.00 | − 3.58*** | 0.00 |
∆SGL | − 4.08*** | 0.00 | − 4.15*** | 0.00 |
∆PGL | − 3.92*** | 0.00 | − 4.24*** | 0.00 |
Panel A: PMG estimation | ||||
---|---|---|---|---|
Variable | Coefficient | Std. error | t statistic | P value |
Long-run results | ||||
OG | 0.15*** | 0.006 | 24.66 | 0.00 |
Short-run results | ||||
ECT | − 0.89*** | 0.21 | − 4.23 | 0.00 |
D(Y(− 1)) | − 0.06 | 0.09 | − 0.64 | 0.52 |
D(OG) | − 0.07 | 0.33 | − 0.22 | 0.83 |
Panel B: Short-run coefficients of each country | |||||
---|---|---|---|---|---|
Variable | Bangladesh | Bhutan | India | Nepal | Pakistan |
ECT | − 1.28*** (0.00) | − 0.57*** (0.00) | − 1.28*** (0.00) | − 1.08*** (0.00) | − 0.23*** (0.00) |
D(OG) | 0.27** (0.04) | − 1.24 (0.17) | 0.47** (0.03) | 0.47*** (0.00) | − 0.32** (0.01) |
Panel A: PMG estimation | ||||
---|---|---|---|---|
Variable | Coefficient | Std. error | t statistic | P value |
Long-run results | ||||
EG | 0.15*** | 0.04 | 3.62 | 0.00 |
SG | − 0.03 | 0.05 | − 0.58 | 0.56 |
PG | 0.03*** | 0.01 | 2.93 | 0.00 |
Short-run results | ||||
ECT | − 0.86*** | 0.14 | − 6.09 | 0.00 |
D(EG) | − 0.19 | 0.19 | − 1.06 | 0.29 |
D(SG) | 0.12 | 0.12 | 1.01 | 0.31 |
D(PG) | − 0.01 | 0.09 | − 0.07 | 0.95 |
Panel B: Short-run coefficients of each country | |||||
---|---|---|---|---|---|
Variable | Bangladesh | Bhutan | India | Nepal | Pakistan |
ECT | − 0.87*** (0.00) | − 0.78*** (0.00) | − 1.12*** (0.00) | − 1.15*** (0.00) | − 0.37*** (0.00) |
D(EG) | − 0.07 (0.76) | − 0.92** (0.01) | − 0.09 (0.40) | 0.14 (0.26) | − 0.03 (0.48) |
D(SG) | 0.41 (0.49) | − 0.16 (0.89) | 0.26** (0.02) | 0.24** (0.03) | − 0.16** (0.02) |
D(PG) | − 0.03 (0.31) | − 0.26* (0.08) | 0.24*** (0.00) | 0.15*** (0.00) | − 0.13*** (0.00) |