IDEAS home Printed from https://ideas.repec.org/a/ist/journl/v72y2022i2p653-687.html
   My bibliography  Save this article

Intra-BRICS Trade: A Panel Data Analysis with Structural Breaks

Author

Listed:
  • Alper Yilmaz

    (Adnan Menderes University, Soke Faculty of Business Administration, Aydin, Turkiye)

Abstract

This article attempts to examine the recent developments that have amplified the consequences of uncertainty regarding trade between Brazil, Russia, India, China, and South Africa (BRICS) countries under global economic turmoil such as occurred in the 2008 financial crisis and trade wars sparked by the USA and the COVID-19 pandemic. These events severely affected intraBRICS trade and investment. For this purpose, we employed the Westerlund and Edgerton cointegration approach to check for cointegration under structural breaks and the procedure for the asymmetric Granger non-causality test to assess the causal relationship between the custom tariff and export variables of BRICS countries with regard to the panel data methodology for the 2000-2020 period using annual data. The empirical results for cointegration indicate the presence of a long-term relationship; in other words, they are seen to move together under investigation. The estimated breakpoints correspond with 2008 and the ongoing financial turmoil and with the 2018-2020 period and the rising trade disputes between USA and China. In addition, the Granger non-causality test provides enough evidence to show opposite directions (signs) for the causal links between the variables that run from tariffs to exports for BRICS countries.

Suggested Citation

  • Alper Yilmaz, 2022. "Intra-BRICS Trade: A Panel Data Analysis with Structural Breaks," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 72(72-2), pages 653-687, December.
  • Handle: RePEc:ist:journl:v:72:y:2022:i:2:p:653-687
    DOI: 10.26650/ISTJECON2022-1096747
    as

    Download full text from publisher

    File URL: https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/F89DF5E1FD70424E94C0DE529B980399
    Download Restriction: no

    File URL: https://iupress.istanbul.edu.tr/en/journal/ije/article/intra-brics-trade-a-panel-data-analysis-with-structural-breaks
    Download Restriction: no

    File URL: https://libkey.io/10.26650/ISTJECON2022-1096747?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Eichengreen, Barry & Irwin, Douglas A., 2010. "The Slide to Protectionism in the Great Depression: Who Succumbed and Why?," The Journal of Economic History, Cambridge University Press, vol. 70(4), pages 871-897, December.
    2. Katarzyna Czech & Michał Wielechowski & Pavel Kotyza & Irena Benešová & Adriana Laputková, 2020. "Shaking Stability: COVID-19 Impact on the Visegrad Group Countries’ Financial Markets," Sustainability, MDPI, vol. 12(15), pages 1-19, August.
    3. Joakim Westerlund & David L. Edgerton, 2008. "A Simple Test for Cointegration in Dependent Panels with Structural Breaks," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(5), pages 665-704, October.
    4. Kapetanios, George & Shin, Yongcheol & Snell, Andy, 2003. "Testing for a unit root in the nonlinear STAR framework," Journal of Econometrics, Elsevier, vol. 112(2), pages 359-379, February.
    5. Chingnun Lee & Jyh-Lin Wu & Lixiong Yang, 2016. "A Simple Panel Unit-Root Test with Smooth Breaks in the Presence of a Multifactor Error Structure," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(3), pages 365-393, June.
    6. Gallant, A. Ronald, 1981. "On the bias in flexible functional forms and an essentially unbiased form : The fourier flexible form," Journal of Econometrics, Elsevier, vol. 15(2), pages 211-245, February.
    7. Zivot, Eric & Andrews, Donald W K, 2002. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 25-44, January.
    8. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    9. Kiyota, Kozo, 2022. "The COVID-19 pandemic and the world trade network," Journal of Asian Economics, Elsevier, vol. 78(C).
    10. Evenett, Simon J., 2009. "What Can Be Learned From Crisis-Era Protectionism? An Initial Assessment," Business and Politics, Cambridge University Press, vol. 11(3), pages 1-26, October.
    11. Amelia Santos-Paulino & A.P. Thirlwall, 2004. "Trade Liberalisation And Economic Performance In Developing Countries - Introduction," Economic Journal, Royal Economic Society, vol. 114(493), pages 1-3, February.
    12. Amelia Santos-Paulino & A. P. Thirlwall, 2004. "The impact of trade liberalisation on exports, imports and the balance of payments of developing countries," Economic Journal, Royal Economic Society, vol. 114(493), pages 50-72, February.
    13. Mr. M. F. Bleaney, 1999. "Price and Monetary Dynamics Under Alternative Exchange Rate Regimes," IMF Working Papers 1999/067, International Monetary Fund.
    14. M. Hashem Pesaran, 2006. "Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure," Econometrica, Econometric Society, vol. 74(4), pages 967-1012, July.
    15. Enders, Walter & Lee, Junsoo, 2012. "The flexible Fourier form and Dickey–Fuller type unit root tests," Economics Letters, Elsevier, vol. 117(1), pages 196-199.
    16. Muhammad Sofjan, 2017. "The Effect of Liberalization on Export-import in Indonesia," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 672-676.
    17. Evenett Simon J, 2009. "What Can Be Learned From Crisis-Era Protectionism? An Initial Assessment," Business and Politics, De Gruyter, vol. 11(3), pages 1-28, November.
    18. Pablo D Fajgelbaum & Pinelopi K Goldberg & Patrick J Kennedy & Amit K Khandelwal, 2020. "The Return to Protectionism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(1), pages 1-55.
    19. Eduardo Gutiérrez & César Martín Machuca, 2021. "The effect of tariffs on Spanish goods exports," Working Papers 2121, Banco de España.
    20. Utai Uprasen, 2014. "The Impact of Non-Tariff Barriers in the European Union on China’s Exports," Palgrave Macmillan Books, in: Bernadette Andreosso-O’Callaghan & Jacques Jaussaud & Maria Bruna Zolin (ed.), Economic Integration in Asia: Towards the Delineation of a Sustainable Path, chapter 8, pages 141-164, Palgrave Macmillan.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Omay, Tolga & Shahbaz, Muhammad & Stewart, Chris, 2021. "Is There Really Hysteresis in OECD Countries’ Unemployment Rates? New Evidence Using a Fourier Panel Unit Root Test," MPRA Paper 107691, University Library of Munich, Germany, revised 10 May 2021.
    2. Tolga Omay & Muhammad Shahbaz & Chris Stewart, 2021. "Is there really hysteresis in the OECD unemployment rates? New evidence using a Fourier panel unit root test," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(4), pages 875-901, November.
    3. Aysegul Corakci & Tolga Omay & Mübariz Hasanov, 2022. "Hysteresis and stochastic convergence in Eurozone unemployment rates: evidence from panel unit roots with smooth breaks and asymmetric dynamics," Oeconomia Copernicana, Institute of Economic Research, vol. 13(1), pages 11-55, March.
    4. Durusu-Ciftci, Dilek & Soytas, Ugur & Nazlioglu, Saban, 2020. "Financial development and energy consumption in emerging markets: Smooth structural shifts and causal linkages," Energy Economics, Elsevier, vol. 87(C).
    5. Nazlioglu, Saban & Gupta, Rangan & Gormus, Alper & Soytas, Ugur, 2020. "Price and volatility linkages between international REITs and oil markets," Energy Economics, Elsevier, vol. 88(C).
    6. Hung, Ying-Shu & Lee, Chingnun & Chen, Pei-Fen, 2022. "China’s monetary policy and global stock markets: A new cointegration approach with smoothing structural changes," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 643-666.
    7. Nazlioglu, Saban & Gormus, N. Alper & Soytas, Uğur, 2016. "Oil prices and real estate investment trusts (REITs): Gradual-shift causality and volatility transmission analysis," Energy Economics, Elsevier, vol. 60(C), pages 168-175.
    8. Nazlioglu, Saban & Gupta, Rangan & Bouri, Elie, 2020. "Movements in international bond markets: The role of oil prices," International Review of Economics & Finance, Elsevier, vol. 68(C), pages 47-58.
    9. Jamal G. HUSEIN & S. Murat KARA, 2023. "Are Shocks To Electricity Consumption Permanent Or Transitory? Evidence From A Panel Stationarity Test With Gradual Structural Breaks For 25 Oecd Countries," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 23(1), pages 57-76.
    10. Phiri, Andrew, 2018. "Robust analysis of convergence in per capita GDP in BRICS economies," MPRA Paper 86936, University Library of Munich, Germany.
    11. Tolga Omay & Ayşegül Çorakcı & Furkan Emirmahmutoglu, 2017. "Real interest rates: nonlinearity and structural breaks," Empirical Economics, Springer, vol. 52(1), pages 283-307, February.
    12. Yilanci, Veli & Aydin, Mücahit & Aydin, Mehmet, 2019. "Residual Augmented Fourier ADF Unit Root Test," MPRA Paper 96797, University Library of Munich, Germany.
    13. Zhongwei, Huang & Liu, Yishu, 2022. "The role of eco-innovations, trade openness, and human capital in sustainable renewable energy consumption: Evidence using CS-ARDL approach," Renewable Energy, Elsevier, vol. 201(P1), pages 131-140.
    14. Awaworyi Churchill, Sefa & Inekwe, John & Smyth, Russell & Zhang, Xibin, 2019. "R&D intensity and carbon emissions in the G7: 1870–2014," Energy Economics, Elsevier, vol. 80(C), pages 30-37.
    15. Güriş, Burak, 2017. "A New Nonlinear Unit Root Test with Fourier Function," MPRA Paper 82260, University Library of Munich, Germany.
    16. Silva Lopes, Artur, 2021. "Non-convergent incomes with a new DF-Fourier test: most likely you go your way (and I'll go mine)," MPRA Paper 120171, University Library of Munich, Germany, revised 09 Oct 2023.
    17. Oatley Thomas, 2010. "Real Exchange Rates and Trade Protectionism," Business and Politics, De Gruyter, vol. 12(2), pages 1-19, August.
    18. Winkelried, Diego, 2021. "Unit roots in real primary commodity prices? A meta-analysis of the Grilli and Yang data set," Journal of Commodity Markets, Elsevier, vol. 23(C).
    19. Singh, Vinay Kumar & Ghosh, Sajal, 2021. "Financial inclusion and economic growth in India amid demonetization: A case study based on panel cointegration and causality," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 674-693.
    20. Nicholas Crafts & Peter Fearon, 2010. "Lessons from the 1930s Great Depression," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(3), pages 285-317, Autumn.

    More about this item

    Keywords

    International trade; Tariff; Panel data analysis JEL Classification: F10 ; F13 ; F23;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ist:journl:v:72:y:2022:i:2:p:653-687. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ertugrul YASAR (email available below). General contact details of provider: https://edirc.repec.org/data/ifisttr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.