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Trade openness and economic development in the UAE: an asymmetric approach

Author

Listed:
  • Abdulrahman Al-Shayeb
  • Abdulnasser Hatemi-J

Abstract

Purpose - The purpose of this paper is to offer a review of the trade policy in the UAE. It also investigates the dynamic interaction between trade openness and GDP per capita in this emerging economy. Design/methodology/approach - The asymmetric generalized impulse response functions and the asymmetric causality tests developed by Hatemi-J are used. Findings - The results from asymmetric generalized impulse response functions indicate that a positive permanent shock in the trade openness results in a significant positive response in the cumulative sum of the positive component of the GDP per capita. Such a response is not found for the negative shocks in the trade openness. Furthermore, neither a positive nor a negative shock in the GPD per capita results in any significant response in the trade openness. These empirical findings are also supported by the implemented asymmetric causality tests. Originality/value - This is the first attempt that investigates the impact of trade openness on economic performance in the UAE. Unlike previous literature on the topic, this paper allows for asymmetric impacts in the empirical model.

Suggested Citation

  • Abdulrahman Al-Shayeb & Abdulnasser Hatemi-J, 2016. "Trade openness and economic development in the UAE: an asymmetric approach," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 43(4), pages 587-597, September.
    • Handle: RePEc:eme:jespps:v:43:y:2016:i:4:p:587-597
    DOI: 10.1108/JES-06-2015-0094
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    More about this item

    Keywords

    Trade openness; Asymmetric causality; Asymmetric impulses; GDP per capita; The UAE; E17; C32;
    All these keywords.

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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