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Export-Led Growth, Growth-Driven Export, Both or None? Granger Causality Analysis on OECD Countries

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  • Konya, L.

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Abstract

This paper investigates the possibility of export-led growth and growth-driven export by testing for Granger causality between the logarithms of real exports and real GDP in twenty-five OECD countries. Two complementary testing strategies are applied. First, depending on the time series properties of the data, causality is tested with Wald tests within finite-order vector autoregressive (VAR) models in levels and/or in first-differences. Then, with no need for pre-testing, a modified Wald procedure is used in augmented level VAR systems. In both cases we experiment with alternative deterministic trend degrees. The results indicate that there is no causality between exports and growth (NC) in Luxembourg and in the Netherlands, exports cause growth (ECG) in Iceland, growth causes exports (GCE) in Canada, Japan and Korea, and there is two-way causality between exports and growth (TWC) in Sweden and in the UK. Although with less certainty, we also conclude that there is NC in Denmark, France, Greece, Hungary and Norway, ECG in Australia, Austria and Ireland, and GCE in Finland, Portugal and the USA. However, in the case of Belgium, Italy, Mexico, New Zealand, Spain and Switzerland the results are too controversial to make a simple choice.

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Bibliographic Info

Article provided by Euro-American Association of Economic Development in its journal Applied Econometrics and International Development.

Volume (Year): 4 (2004)
Issue (Month): 1 ()
Pages:

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Handle: RePEc:eaa:aeinde:v:4:y:2004:i:1_5

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  1. Judith A. Giles & Cara L. Williams, 2000. "Export-Led Growth: A Survey of the Empirical Literature and Some Noncausality Results, Part 2," Econometrics Working Papers 0002, Department of Economics, University of Victoria.
  2. Toda, Hiro Y & Phillips, Peter C B, 1993. "Vector Autoregressions and Causality," Econometrica, Econometric Society, vol. 61(6), pages 1367-93, November.
  3. Riezman, R.G. & Summers, P.M. & Whiteman, C.H., 1991. "The Engine of Growth or Its Handmaiden? A Time Series Assessment of Export-Led Growth," Working Papers 92-27, University of Iowa, Department of Economics.
  4. Zapata, Hector O. & Rambaldi, Alicia N., 1996. "Monte Carlo Evidence On Cointegration And Causation," Staff Papers 31690, Louisiana State University, Department of Agricultural Economics and Agribusiness.
  5. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
  6. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
  7. Judith A. Giles & Cara L. Williams, 2000. "Export-Led Growth: A Survey of the Empirical Literature and Some Noncausality Results, Part 1," Econometrics Working Papers 0001, Department of Economics, University of Victoria.
  8. Guisan, M.Carmen, 2001. "Causality and Cointegration between Consumption and GDP in 25 OECD countries: limitations of cointegration approach," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 1(1), pages 39-61.
  9. Karras, Georgios, 2003. "Trade Openness And Economic Growth Can We Estimate The Precise Effect?," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 3(1).
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Cited by:
  1. Jaime Andrés Collazos & Pedro Luis Rosero, 2010. "¿Posee el Valle del Cauca una economía transformadora de importaciones orientadas a la Exportación?," DOCUMENTOS DE POLÍTICAS PÚBLICAS 006880, UNIVERSIDAD ICESI.
  2. Guisan, M.C., 2006. "Industry, Foreign Trade and Development: Econometric Models of Europe and North America, 1965-2003," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 3(1), pages 5-30.
  3. Edgardo Sica, 2007. "Causality between Energy and Economic Growth: the Italian case," Quaderni DSEMS 03-2007, Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia.

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