Trade Openness, Financial Development and Economic Growth in Lesotho: BVAR and Time-varying VAR Analysis

International Journal of Economics and Financial Issues Pub Date : 2024-05-14 DOI:10.32479/ijefi.15721

K. Sanusi, Z. Dickason-Koekemoer

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Abstract

This research paper explores the dynamic relationship between trade openness, financial development, and economic growth in Lesotho. The study utilizes quarterly time series data spanning from 1970 to 2021, obtained from the Central Bank of Lesotho. This paper makes a significant contribution to the methodological discourse by utilizing a time-varying VAR approach, in addition to the Bayesian VAR estimation approach. The empirical results indicate that there is no cointegration relationship between economic growth, financial development, and trade openness. However, the evidence shows a unidirectional causality from economic growth to trade openness in Lesotho. The Bayesian VAR and time-varying VAR estimations reveal that the variables dynamically react and adjust to shocks among the variables. The study recommends that to stimulate the opening up of the economy to the world, growth-enhancing policies such as the provision of world-class infrastructure facilities, improved healthcare facilities, and a conducive macroeconomic environment should be implemented, considering the insufficient international demand in Lesotho.

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莱索托的贸易开放、金融发展和经济增长：BVAR 和时变 VAR 分析

本研究论文探讨了莱索托贸易开放、金融发展和经济增长之间的动态关系。研究利用了莱索托中央银行提供的 1970 年至 2021 年的季度时间序列数据。除贝叶斯 VAR 估计方法外，本文还采用了时变 VAR 方法，为研究方法论做出了重要贡献。实证结果表明，经济增长、金融发展和贸易开放之间不存在协整关系。然而，证据显示莱索托的经济增长与贸易开放之间存在单向因果关系。贝叶斯 VAR 和时变 VAR 估计表明，变量之间会对冲击做出动态反应和调整。研究建议，考虑到莱索托的国际需求不足，为刺激经济向世界开放，应实施促进增长的政策，如提供世界一流的基础设施、改善医疗保健设施和有利的宏观经济环境。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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International Journal of Economics and Financial Issues

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期刊介绍： International Journal of Economics and Financial Issues (IJEFI) is the international academic journal, and is a double-blind, peer-reviewed academic journal publishing high quality conceptual and measure development articles in the areas of economics, finance and related disciplines. The journal has a worldwide audience. The journal''s goal is to stimulate the development of economics, finance and related disciplines theory worldwide by publishing interesting articles in a highly readable format. The journal is published Bimonthly (6 issues per year) and covers a wide variety of topics including (but not limited to): Macroeconomcis International Economics Econometrics Business Economics Growth and Development Regional Economics Tourism Economics International Trade Finance International Finance Macroeconomic Aspects of Finance General Financial Markets Financial Institutions Behavioral Finance Public Finance Asset Pricing Financial Management Options and Futures Taxation, Subsidies and Revenue Corporate Finance and Governance Money and Banking Markets and Institutions of Emerging Markets Public Economics and Public Policy Financial Economics Applied Financial Econometrics Financial Risk Analysis Risk Management Portfolio Management Financial Econometrics.