Spillover Effects of Economic and Financial Growth of SAARC Member Countries on Afghanistan’s Economic Growth

Document Type : Research Paper

Authors

1 Ph.D. Candidate in Financial Economics, Department of Economics, University of Yazd, Yazd, Iran

2 Professor of Economics, University of Yazd, Yazd, Iran

Abstract

The purpose of this study is to analyze the spillover effects of economic and financial growth in the South Asian Association for Regional Cooperation (SAARC) member countries (India, Pakistan, Maldives, Nepal, Sri Lanka, Bangladesh, and Bhutan) on Afghanistan’s economy. In this research, annual data on economic variables (gross domestic product, exports of goods and services) and financial variables (exchange rate) over the period 2000–2021 have been used, applying the panel vector autoregression (PVAR) model. The results of this study indicate the existence of a positive and long-term relationship between the growth of economic and financial variables in India, Pakistan, Bangladesh, the Maldives, Bhutan, Sri Lanka, and Afghanistan. In the short term as well, Afghanistan’s economic growth depends on the economic and financial variables of other SAARC member countries, except for Nepal. Furthermore, the long-term results confirm that SAARC member countries play a significant role in explaining the fluctuations of Afghanistan’s economic and financial variables. It is noteworthy that India and Pakistan, respectively, have the largest share in this regard.

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References

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