DETERMINANTS OF BALANCE OF PAYMENT FLUCTUATIONS IN THE PHILIPPINES: 1981-2019
Abstract
This paper identifies the determinants of the balance of payments fluctuations in the Philippines. Specifically, it presented the trends and movements of a balance of payments, interest rate, inflation rate, gross domestic product growth rate, and real exchange from 1981 to 2019. The study used Johansen Co-integration, Granger Causality, and Vector Autoregression (VAR) models to analyze this study. Johansen's Co-integration analysis revealed that the determinants of the balance of payments interest rate (IR), inflation rate (INF), an exchange rate (EX), and real GDP are rejected at a 5% significant level. On the other hand, unrestricted VAR model, there exists a relationship between the balance of payments (BOP), interest rate (IR), and inflation rate (INF). Granger causality test results revealed that BOP does not Granger cause IR and INF does not Granger cause BOP are rejected at the 5% significant level because the causality test results are significant. BOP and IR have a unidirectional relationship. Moreover, results show that there is unidirectional causality generally running from the balance of payment (BOP) to the interest rate (IR) and inflation rate (INF) to the balance of payment (BOP).
JEL: H10; H20; H30
Article visualizations:
Keywords
Full Text:
PDFReferences
Adamu, P. A., & Itsede, O. C. (2010). Balance of Payment Adjustment the West African Monetary Zone Experience. Journal of Monetary and Economic Integration, 10, 100-116. - References - Scientific Research Publishing. (n.d.). Retrieved September 23, 2022, from https://scirp.org/reference/referencespapers.aspx?referenceid=3098616
Ayadi, F. (2008). The Impact of External Debt on Economic Growth: A Comparative Study of Nigeria and South Africa. Texas Southern University
A. H. Sultani, and U. Faisal (2022). Determinants of Balance of Payments: A Comparative Review of Developing and Least Developed Countries. International Journal of Research and Analytical Reviews, April 2022, Volume 9, Issue 2
Camdessus, M. (1993). Balance of Payments Manual. International Monetary Fund.
Canlas, D. (1984). An Analysis of Philippine Economic Crisis. A Workshop Report, School of Economics, University of Philippines, Philippines.
Clark, W. and A. Ibikunle (2004). An Empirical Investigation of the Link between Exchange Rate and Trade in Nigeria. P.M.B. 001 Akungba-Akoko, Ondo State, Nigeria.
Colander, D. C. (2004). Macroeconomics Fifth Edition. Middlebury College. Published by McGraw-Hill. The McGraw-Hill Companies, Inc.
Eita, J. H. and M. H. Gaomah (2010). Macroeconomic Determinants of Balance of Payments in Namibia. Namibia University, Namibia.
E. Weerasinghe and T. R. Perera (2019). Determinants of Balance of Trade in the Sri Lankan Economy. International Journal of Trade, Economics and Finance, Vol. 10, No. 1, February 2019
Frankel J. and E. Cavallo (2004). Does openness to trade make countries more vulnerable to sudden stops or less? Using gravity to establish causality. NBER working papers no. 10957.
Fieke, N. S. (2009). What is Balance of Payments? Federal Reserve Bank of Boston, Boston.
Kantidas, S. (undated). The Monetary Theory of Balance of Payment: an Empirical Study on Bangladesh.
Lim, J. (2006). A Review of Philippine Monetary policy towards an Alternative Monetary Policy. 1112 Metro Manila, Philippines.
Melvin, M. (1992). International Money and Finance, 3rd. edition. Harper Collins Publishers Inc., New York.
M. E. Kingia, and S. Muba (2021). Assessment of the Determinants of Balance of Payment in Tanzania. East African Journal of Business and Economics. Vol 4 No. 1 (2021): East African Journal of Business and Economics.
Natukunda, Primrose Dianah (2021). Analysis of determinants of balance of payments in Uganda (1994 – 2019). Makerere University, undergraduate dissertations repository.
Nwani, V. M. (2011). Determinants of Balance of Payment Fluctuations in Nigeria. Economic Associates, Victoria Island, Lagos, Nigeria.
Remolona, E. M and M. B. Lamberte (2011). Financial Reforms and Balance of Payments Crisis. The Case of the Philippines: 1990-2010. School of Economics, University of Philippines, Philippines.
Thrillwall, A. P. (2004). Trade, Balance of Payments and Exchange Rate Policy in Developing Countries, Edward Edger Publishing, United Kingdom
Tulsa, J. (2010). Malaysian Balance of Payment: Keynesian Approach and Monetary Approach. Malaysia.
Umer, A. and F. Danjuma (2010). An Empirical of the Balance of Payments as Monetary Phenomenon: Nigeria’s Experience. Department of Economic, Ahmadu Bello University Zaria. Nigeria.
Wells, G. J. (2003). The Balance of Payment: Meaning and Significance. Foreign Affairs, Defense and Trade Division. U.S.A.
Yap, J. (1996). Inflation and Economic Growth in the Philippines. Philippine Institute for Development Studies (PIDS). Discussion Paper Series No. 2009-30.
Online References
http://www.abouteconomics.com/
www.business.inquirer.net
www.bsp.gov.ph
www.nso.gov.ph
www.reut-institute.org.
www.tradechakra.com
www.econpapers.repec.org.
www.useconomy.com
www.mysmp.com/forex/balance-of-payments
http://newsinfo.inquirer.net
www.qfinance.com
www.history.com/topics/world-war-ii
www.philippinecountry.com
www.economywatch.com
www.pids.gov.ph
www.wikipedia.com
www.etoro.com
www.statsoft.com
www.mongabay.com
DOI: http://dx.doi.org/10.46827/ejefr.v7i1.1423
Refbacks
- There are currently no refbacks.
Copyright (c) 2023 Jesson Rey F. Sabado
This work is licensed under a Creative Commons Attribution 4.0 International License.
The research works published in this journal are free to be accessed. They can be shared (copied and redistributed in any medium or format) and\or adapted (remixed, transformed, and built upon the material for any purpose, commercially and\or not commercially) under the following terms: attribution (appropriate credit must be given indicating original authors, research work name and publication name mentioning if changes were made) and without adding additional restrictions (without restricting others from doing anything the actual license permits). Authors retain the full copyright of their published research works and cannot revoke these freedoms as long as the license terms are followed.
Copyright © 2016 - 2023. European Journal of Economic and Financial Research (ISSN 2501-9430) is a registered trademark of Open Access Publishing Group. All rights reserved.
This journal is a serial publication uniquely identified by an International Standard Serial Number (ISSN) serial number certificate issued by Romanian National Library. All the research works are uniquely identified by a CrossRef DOI digital object identifier supplied by indexing and repository platforms. All the research works published on this journal are meeting the Open Access Publishing requirements and standards formulated by Budapest Open Access Initiative (2002), the Bethesda Statement on Open Access Publishing (2003) and Berlin Declaration on Open Access to Knowledge in the Sciences and Humanities (2003) and can be freely accessed, shared, modified, distributed and used in educational, commercial and non-commercial purposes under a Creative Commons Attribution 4.0 International License. Copyrights of the published research works are retained by authors.
