Economic Journal of Nepal

Book Review: The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness

Rashmi Shilpkar Rajkarnikar — 2022-12-31

Impact of Natural Disaster on Health of Children: Empirical Evidence from Nepal’s Earthquake

Nirmal Kumar Raut — 2022-12-31

This study estimates the impact of the 2015 Nepal earthquake on the health of children: weight, height, and body mass index (BMI). It uses two rounds of data related to Nepal Demographic Health Surveys (NDHS) before and after the earthquake, i.e., in 2011 and 2016. The study combines child-related information and household-level data from NDHS with the earthquake data available at the district level to identify the impact of earthquakes on children’s health. By focusing on children between 0 to 5 years of age and using the difference-in- difference framework as an identification strategy, results show that the BMI increased for children living in affected areas. This increase in BMI is primarily driven by an increase in their weight. The study further shows that the BMI of children increases in earthquake-affected areas because of the increased food consumption. The study underscores the importance of being selective in the type of food-aid distributed as well as changing the consumption behavior of children during the post-disaster periods.

Social Overhead Capital and Output Nexus in Nepal: A Toda-Yamamoto Causality Analysis

Dil Nath Dangal — 2022-12-31

Social overhead capital (SOC) is complementary to increasing productivity, particularly when the economy is also experiencing technological progress, thus spurring economies of scale and spillover effects. In its absence, the objective of developing nations to increase national output may be difficult to achieve. Such logjams are also found in Nepal. The objective of the study is to explore and evaluate the causal relationship between SOC and national output using VAR (k + dmax) based on the Toda-Yamamoto Granger no-causality test. The study uses the time series data of 36 years from 1986 to 2021. Nominal GDP is the dependent variable used to represent national output. Similarly, energy, road, telephone, vehicle, irrigation, gross fixed capital formation, health, and student enrollment in higher education are the independent variables used to represent SOC. The study found that roads, telephones, vehicles, and irrigation cause the NGDP, whereas overall SOC variables also caused the NGDP at a one percent significance level. It is also found that NGDP causes the energy, telephone, and enrollment of students in higher education. The study concluded that there is a significant causal nexus between SOC and NGDP directly or indirectly. The study underscores the vital need for the government of Nepal and policymakers to take measures to increase the national output and productivity. This means significantly strengthening key sectors like energy, infrastructure, healthcare, and higher education enrollment and promoting fixed capital formation.

Assessing the Relationship Between Income Inequality and Economic Growth in South Asia

Khubi Ram Acharya — 2022-12-31

The trade-off between inequality and growth and what should be done about it are some of the most debated issues in economics. The study aims to assess the relationship between income inequality and economic growth in South Asia. With different kinds of literature assessing different relationships between these two variables, the effects of inequality on growth are still very ambiguous for researchers. The paucity of time series data on the ‘Gini Ratio’ for South Asia has been one of the primary reasons for a small or no contribution to the effects of inequality in growth in the region. Here, the study used the data on the income share ratio of the top 10 percentile and bottom 50 percentile from 1980 to 2015 as a proxy for inequality and see its relationship with growth using the ‘Generalized Method of Moments’ estimation technique. The study found that inequality has a significant positive relationship with growth, which provides the basis for a trade-off between equity and efficiency. This gives rise to important policy implications for policymakers dealing with inequality.

Impact of Political Instability on Economic Growth of Nepal

Ram Briksh Mandal — 2022-12-31

This study examines the impact of political instability on the economic growth in Nepal for the period from 2002 to 2021. The study analyzes the existence of the long run relationship between political indicators such as control of corruption, government effectiveness, political stability and absence of violence/terrorism, rule of law, regularity quality and micro economic indicator inflation and the GDP percapita. The study utilized time series data analysis, using annual data covering the period of 2002 to 2021 of Nepal. The empirical results of the study, using the ARDL model, highlight the impact of different political instability indicators on economic growth. Moreover, these results indicate that there is a long run relationship between the political indicators on the economic growth. More specifically, the results show that the inflation and regulatory quality indicators have a negative impact on economic growth, while the political stability and absence of violence/terrorism has the minimal impact in the long run. Similarly, the result of control of corruption shows a positive impact on the economic growth in the short run.