Original scientific paper
https://doi.org/10.2478/zireb-2024-0018
Does Political Stability Matter for the UK and the USA? The Time Variant Analysis through Rolling Window Causality Approach
Sajid Ali
; Department of Public Administration, Karachi University & IQRA University, Karachi, Pakistan
*
Syed Ali Raza
; Department of Business Administration, IQRA University,Karachi, Pakistan & Adnan Kassar School of Business,Lebanese American University, Beirut, Lebanon
Maiyra Ahmed
; Iqra University, Karachi, Pakistan
* Corresponding author.
Abstract
The study aims to examine the time-varying causality between political stability and economic growth. Secondly, study also evaluates the effect of political stability on economic growth of the United Kingdom and the United States. Therefore, a time-series model is proposed
to assess the framework’s constancy with time, which assumes that the coefficients are stable throughout time. A rolling window technique has been applied to the dataset from the year 2002 to 2019, respectively. The results indicate that the time-varying positive bidirectional causality is present between political stability and economic growth for a particular subsample, verifying the effect of political stability on economic growth and vice versa. Hence, our results exhibit that the connection between two-series would benefit the economy due to the positive yet significant relationship. Therefore, uncertain political conditions would directly affect the economy’s growth rate in terms of tourism, currency value, investment, and other growth factors. Whereas, if the uncertainty regarding the political environment reduces, it would be advantageous for economic development.
Keywords
Brexit; Political stability; Economic growth; Rolling Window Causality
Hrčak ID:
323279
URI
Publication date:
9.12.2024.
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