Investments, Economic Growth and Employment: VAR Method for Romania

Abstract

Economic growth can be seen as an effect of both fiscal policies and different legislative norms applied at national and macroeconomic level. Investments are a determining factor in the evolution of socio-economic life, influencing also the employment rate. This paper aims to identify the influence of investments on economic growth and employment using the vector autoregressive model (VAR). Based on the quarterly data from Romania, between the first quarter of 2000 and the second quarter of 2018, the Granger causality test and the impulse - response function was applied to identify the effect of the investments on the sustainable development of the Romanian economy. The results revealed that investments in Romania influence the economic growth and, implicitly, the employment. In terms of impulse – response function, a negative relationship between investment and employment was identified, which may be due to the fact that the need for human resources is no longer a priority in some sectors of activity due to technology.

The augmented and integrative model of economic growth: Theoretical and empirical evidence from USA

“…Thus, this reduced impact of unemployment on the economic activity effect of human capital corroborates with the studies of (Adeleye et al, 2022;Agasisti and Bertoletti, 2022;Fatimah et al, 2021;Majidi, 2017;Matousek and Tzeremes, 2021;Shidong et al, 2022;Zafar et al, 2019). Despite arguing that the Okun law is not valid in the proportion foreseen by the author, however, it cannot be denied that the described effect is observed, which agrees with the studies (Altunöz, 2019;Daniela et al, 2019;Dritsakis and Stamatiou, 2018;Ikechukwu, 2017;Nagel, 2015;Okur et al, 2018;Pasara and Garidzirai, 2020;Sharma and Sharma, 2019).…”

“…The results of the estimates indicated that unemployment is positively affected by economic growth, according to the authors, and for this sample, a 1% increase in GDP caused a 0.8% drop in unemployment (Okur et al, 2018). For the Romanian economy, it was observed that investment promotes economic growth and implicitly is responsible for generating more jobs (Daniela et al, 2019). The existing relationship between unemployment and economic activity was investigated in Nigeria by (Ikechukwu, 2017) between 1970-2014.…”

Impact of Financial Development Shocks on Renewable Energy Consumption in Saudi Arabia

“…The Wald lag exclusion test was used to examine the possibility of lag elimination of any variable in the VAR system. The Wald test is a safety test for the number of lags chosen from the selection criteria [86]. Based on the results of the Wald test shown in Table 6, we found that the selected variables used in the VAR were significant (p-value < 0.05).…”