Are Indian Exports And Imports Cointegrated?

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Are Indian Exports And Imports Cointegrated?

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KONYA, Laszlo ()
SINGH, Jai Pal

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Laszlo Konya

Abstract

The purpose of this study is to investigate empirically the presence of an equilibrium relationship between the logarithms of Indian exports and imports between 1949/50 and 2004/2005, using the unit-root, cointegration approach. To ascertain robustness, exports and imports measured in current prices but in two currencies, Indian rupee and US dollar have been analyzed. Moreover, since the sample comprises data from both the fixed and freely floating exchange rate periods, the tests have also been performed allowing for a one-time structural break in 1992/93. The results indicate no-cointegration between exports and imports. The lack of cointegration means that Indian macroeconomic policies have been ineffective in bringing exports and imports into long-run equilibrium and India is in violation of her international budget constraint.

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

Volume (Year): 8 (2008)
Issue (Month): 2 ()
Pages: 177-186
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Handle: RePEc:eaa:aeinde:v:8:y:2008:i:2_14

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Related research
Keywords: Export; Import; Cointegration; India;

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Find related papers by JEL classification:
C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions
C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
O24 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

References listed on IDEAS
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Guisan, M.C., 2004. "Human Capital, Trade and Development in India, China, Japan and other Asian Countries, 1960-2002: Econometric Models and Causality Tests," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 4(3), pages 123-139. [Downloadable!]
Manuchehr Irandoust & Johan Ericsson, 2004. "Are Imports and Exports Cointegrated? An International Comparison," Metroeconomica, Blackwell Publishing, vol. 55(1), pages 49-64, 02. [Downloadable!] (restricted)
Hakkio, Craig S & Rush, Mark, 1991. "Is the Budget Deficit "Too Large?"," Economic Inquiry, Oxford University Press, vol. 29(3), pages 429-45, July.
Mohsen Bahmani-Oskooee & Hyun-Jae Rhee, 1997. "Are Imports And Exports Of Korea Cointegrated?," International Economic Journal, Korean International Economic Association, vol. 11(1), pages 109-114, April. [Downloadable!] (restricted)
Husted, Steven, 1992. "The Emerging U.S. Current Account Deficit in the 1980s: A Cointegration Analysis," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 159-66, February. [Downloadable!] (restricted)
MANUCHEHR IRANDOUST & BOO SJÖÖ, 2000. "The Behavior Of The Current Account In Response To Unobservable And Observable Shocks," International Economic Journal, Korean International Economic Association, vol. 14(4), pages 41-57, December. [Downloadable!] (restricted)
Dierk Herzer & Felicitas Nowak-Lehmann D., 2006. "Is there a long-run relationship between exports and imports in Chile?," Applied Economics Letters, Taylor and Francis Journals, vol. 13(15), pages 981-986, December. [Downloadable!] (restricted)

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