A long-run and short-run analysis of the macroeconomic interrelationships in Vietnam

Nguyen, Dao Thi Hong, Sun, Sizhong, and Anwar, Sajid (2017) A long-run and short-run analysis of the macroeconomic interrelationships in Vietnam. Economic Analysis and Policy, 54. pp. 15-25.

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Abstract

Using quarterly data over the March 2001 to December 2011 period and employing the vector error correction (VEC) methodology, this paper investigates the interrelationships among GDP, foreign direct investment (FDI), international trade, the inflation rate and state investment in Vietnam. The results of the Johansen cointegration test confirm the presence of a long-run relationship among the variables. The analysis of the short-run dynamics reveals that the impact of a shock to GDP on FDI is more significant than the impact of FDI on GDP. Furthermore, FDI exerts a stronger impact on exports than imports and Vietnam’s inflation rate appears to play a crucial role in affecting the dynamics of some of the key economic variables. Our work highlights the need for effective and consistent policies that not only control the rate of inflation but also lead to sustainable economic growth.

Item ID: 48988
Item Type: Article (Research - C1)
ISSN: 0313-5926
Keywords: VEC; FDI; trade; growth; Vietnam
Date Deposited: 26 Jun 2017 22:53
FoR Codes: 14 ECONOMICS > 1402 Applied Economics > 140202 Economic Development and Growth @ 50%
14 ECONOMICS > 1402 Applied Economics > 140212 Macroeconomics (incl Monetary and Fiscal Theory) @ 50%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9101 Macroeconomics > 910103 Economic Growth @ 100%
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