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Exactly what is the link between export and growth in Taiwan? new evidence from the Granger causality test

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  • Shyh-Wei Chen

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    (Tunghai University)

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    Abstract

    We assess the validity of the Export-led Growth (ELG) and the Growth-driven Export (GDE) hypotheses in Taiwan by testing for Granger causality using the vector error correction model (VECM) and the bounds testing methodology developed by Pesaran {\it et al.} (PSS, 2001). The empirical results substantiate that a long-run level equilibrium relationship exists among exports, output, terms of trade and labor productivity of the model and that Granger causal flow between real exports and real output is reciprocal. Thus, our results attest to the advantage of the export-led growth strategy for continuous growth in Taiwan.

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    Bibliographic Info

    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 6 (2007)
    Issue (Month): 7 ()
    Pages: 1-10

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    Handle: RePEc:ebl:ecbull:eb-06f40006

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    1. Pesaran, M. H. & Shin, Y. & Smith, R. J., 1997. "Structural Analysis of Vector Error Correction Models with Exogenous I(1) Variables," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 9706, Faculty of Economics, University of Cambridge.
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    Cited by:
    1. Akmal, Muhammad Shahbaz & Ahmad, Khalil & Ali, Muhammad, 2009. "Exports-Led Growth Hypothesis in Pakistan: Further Evidence," MPRA Paper 16043, University Library of Munich, Germany.

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