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Abstract

This paper investigates relationship between FDI and current account CA in Pakistan using the Johansen-Juselius cointegration technique and the Granger causality test. The study results indicate that FDI and CA are cointegrated and thus exhibit a reliable long run relationship. The Granger causality test findings indicate that the causality between FDI and CA is uni-directional. However, there is no short run causality from FDI to CA and vice versa. Therefore, as a policy implication that FDI inflows may cause to the deterioration of the balance of payments in the long run should be taken into account when policy makers decide to implement policies to attract foreign investors.



Item Type: MPRA Paper -

Original Title: The Causal Relationship between Foreign Direct Investment and Current Account: An Empirical Investigation for Pakistan Economy-

Language: English-

Keywords: Asia; Pakistan; Cointegration; Granger; causality; FDI; Current Assount; error correction-

Subjects: F - International Economics > F2 - International Factor Movements and International BusinessP - Economic Systems > P4 - Other Economic Systems > P45 - International Trade, Finance, Investment, and AidF - International Economics > F3 - International FinanceF - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements-





Autor: Siddiqui, Danish Ahmed

Fuente: https://mpra.ub.uni-muenchen.de/19743/







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