An Empirical Analysis Of Sustainability Of Trade Deficit: Evidence From Sri Lanka

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An Empirical Analysis Of Sustainability Of Trade Deficit: Evidence From Sri Lanka

Author Info

PERERA, Nelson ()
VARMA, Reetu

Abstract

In this paper, the long-run relationship between Sri Lankan exports and imports during the period 1950 to 2006 is examined using unit root tests and cointegration techniques that allow for an endogenously determined structural break. The results failed to support the existence of a long-run equilibrium between exports and imports in Sri Lanka. This finding questions the effectiveness of Sri Lanka’s current long-term macroeconomic policies and suggests that Sri Lanka is in violation of its international budget constraint.

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

Volume (Year): 5 (2008)
Issue (Month): 1 ()
Pages: 79-92
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Handle: RePEc:eaa:ijaeqs:v:5:y2008:i:1_6

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Find related papers by JEL classification:
C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Hypothesis Testing
C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Robin L. Lumsdaine & David H. Papell, 1997. "Multiple Trend Breaks And The Unit-Root Hypothesis," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 212-218, May. [Downloadable!] (restricted)
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Other versions:
- Perron, P, 1988. "The Great Crash, The Oil Price Shock And The Unit Root Hypothesis," Papers 338, Princeton, Department of Economics - Econometric Research Program.
Zivot, Eric & Andrews, Donald W K, 1992. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(3), pages 251-70, July.
Other versions:
- Eric Zivot & Donald W.K. Andrews, 1990. "Further Evidence on the Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Cowles Foundation Discussion Papers 944, Cowles Foundation, Yale University. [Downloadable!]
- 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.
Gregory, Allan W & Hansen, Bruce E, 1996. "Tests for Cointegration in Models with Regime and Trend Shifts," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(3), pages 555-60, August.
Perron, Pierre, 1997. "Further evidence on breaking trend functions in macroeconomic variables," Journal of Econometrics, Elsevier, vol. 80(2), pages 355-385, October. [Downloadable!] (restricted)
Other versions:
- Perron, P., 1990. "Further Evidence On Breaking Trend Functions In Macroeconomics Variables," Papers 350, Princeton, Department of Economics - Econometric Research Program.
- Perron, P., 1994. "Further Evidence on Breaking Trend Functions in Macroeconomic Variables," Cahiers de recherche 9421, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
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Stilianos Fountas & Jyh-Lin Wu, 1999. "Are The U.S. Current Account Deficits Really Sustainable?," International Economic Journal, Korean International Economic Association, vol. 13(3), pages 51-58, October. [Downloadable!] (restricted)
Other versions:
- Fountas, S. & Wu, J.-L., 1998. "Are the US Current Account Deficits Really Sustainable?," Department of Economics 20, National University of Ireland, Galway - Department of Economics.
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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