Mohamed A. M. Sallam^1,2

(1. Department of Economics, Faculty of Commerce, Kafr Elsheikh University, Egypt;

2. Department of Economics, College of Economics and Administrative Sciences,

Al-Imam Mohammad Ibn Saud Islamic University (IMSIU), Saudi Arabia)

 

 

Abstract: This paper explores the relationship between some macroeconomic variables and economic growth. It aims to examine the effect of long-run relationship and the role of imports, exports, Gross Fixed Capital Formation (GFCF) and inflation on economic growth Egyptian using annual data covering the period 1970-2013. The unit root test (ADF, PP) revealed that variables under consideration are integrated into I(0) and I(1), which lead to the application of ARDL approach. The empirical results utilize the ARDL co-integration analysis to establish the relationship in the long-run between the above independent variables and economic growth. Exports prove to have a significant positive effect on economic growth rate, while Imports have a significant negative effect on economic growth rate. This result seems to agree with the economic theory, unlike the result about the role of GFCF on economic growth rate which disagrees with the economic theory, where a significant negative effect on economic growth rate. The results of short-run dynamics analysis confirmed the existence equilibrium relationship in long-run. The Wald test results confirmed the existence of influence for independent variables of this model on the dependent variable in the short run. The study recommended a policy of exports promotion and more control to imports and inflation.

 

 

Key words: export; import; GFCF; inflation; economic growth; ARDL approach; ECM

 

JEL codes: F10, C32, O 11, O40