Browsing by Author "Sivarajasingham, S."

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    The Dynamic Interrelationship between Defense Expenditure and Debt in Sri Lanka
    (University of Kelaniya, 2012) Jesmy, A.R.S.; Sivarajasingham, S.
    There has been much concern in the relevant literature about the possible destructive economic effects of large military expenditures. It is supported by academics and scholars that defense expenditure can significantly affect a country’s economic growth and in some cases it influences external and internal debt. However, relevant empirical studies have produced contradictory evidence while the literature in this field remains relatively poor. Since independence, Sri Lanka has taken several steps to build up its economy in a successful way. At the same time, the country suffered nearly three decades of civil war and heavier defense burden during this time. Military expenditure was very low before the 1980s, but since then a need for foreign borrowing and external debt accumulation grew. Therefore, there should be a possibility relation between the deficits and foreign borrowing in Sri Lanka. Military spending affects the stock of external debt through many channels; for instance, rapid increase in military spending raises volume of external debt by pressing budget revenues which increases the government borrowing from internal and external sources of finance and increases the debt responsibility in the country (Karagol, 2006). An increase in debt services is linked with high level of external debt which limits investment and capital formation that in turn slows down the rate of economic growth. The main objective of this study is to investigate the dynamic interrelationship between defense expenditure and debt problem in Sri Lanka for the period from1983 to 2011. Data for this study have been collected from the Central Bank Annual Reports. The results show that defense expenditure, domestic debt, and foreign debt are on an upward trend, and foreign debt growth started to go upward since 2000. The massive increases of defense expenditure cause several harmful effects on macroeconomic variables. The results reveal that a rise in military expenditures increases the domestic debt and stock of external debt. The reductions in military spending will reduce the debt problem and will shift resources to developmental projects and stimulate the pace of economic growth. This study invites policymakers to approach the problem of curtailing debt in innovative ways in Sri Lanka.
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    The Dynamic Sectoral Growth Linkages: Evidence from Sri Lanka
    (5th National Conference on Applied Social Statistics (NRCASS) - 2019, Department of Social Statistics, Faculty of Social Sciences, University of Kelaniya, Sri Lanka, 2019) T. Sukirtha, T.; Sivarajasingham, S.; Balamurali, N.
    An understanding of sectoral growth dynamics becomes more important for policy formulation in designing a balanced growth in the economy. This study attempts to examine the dynamic growth linkages among three major sectors; agriculture, industry and services of the Sri Lankan economy for the period 1960-2017. The variables used in this study are Agricultural GDP, Industrial GDP, Service GDP and Overall GDP. The data for the study are collected from the Central Bank Annual Report 2017. Graphical analysis including scatter plot, line graph, Confidence Ellipse and Nearest Neighbor fit are used to identify the basic features and the relationship between sectoral GDP series. Inter temporal correlation results show that there exists a high positive statistically significant correlation between all sectors GDP at 5 percent level. Unit root test results show that all GDP series are nonstationary. First difference of all log (GDPi) series are stationary. Engle-Granger (EG) co-integration test using fully modified OLS estimation provides evidence of long run equilibrium relationship between sectors. The results from ECM shows that the coefficient of error correction terms are statistically significant and had expected sign (negative) for all models, all sectors are positively related significantly even in the Short run. The diagnostic test results indicate that the results are robust. Granger causality tests indicate that Agriculture and Industrial Sector Granger cause economic growth significantly. It is also noted that overall economic growth Granger cause agriculture sector GDP. The investigation of causality analysis among sectors show that service and agriculture sectors are having two-way Granger causal relationship in the short run. In addition, Service sector Granger cause Industrial sector while Industrial Sector Granger cause Agricultural sector significantly. In contrast, Error correction term coefficient Granger causality indicator (ECT) shows that there is a significant causal relationship among sectors in the long run. Results indicate that agriculture sector Granger cause other sectors significantly and is base for livelihood for more people. Therefore, government needs to support agriculture sector to have stable overall economic growth. Empirical results indicate that all sectors are interlinked. However, study need to promote all sectors in effective and stable ways.