The sustainability of trade balances in sub-Saharan Africa: panel cointegration tests with cross-section dependence
AbstractThis article investigates the sustainability of trade balances in the sub-Saharan African regions, using both the panel unit root (Im--Pesaran--Shin (IPS)) test proposed by Im et al. (2003) and the cross-sectionally augmented version of the IPS (Pesaran Cross-sectional IPS (CIPS)) test suggested by Pesaran (2007), where the former test is based on the assumption of cross-section independence and the latter actually considers cross-section independence. Although the empirical results based on the IPS test indicate that the balance of trade in the sub-Saharan African regions is sustainable, the empirical results of the CIPS test reveal that it is not sustainable. Since Cross-section Dependence (CD) was recognized using the CD test developed by Pesaran (2004), there is a possibility that the empirical results based on the IPS test are spurious.
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Bibliographic InfoArticle provided by Taylor and Francis Journals in its journal Applied Economics Letters.
Volume (Year): 19 (2012)
Issue (Month): 2 (February)
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Other versions of this item:
- HASHIGUCHI, Yoshihiro & HAMORI, Shigeyuki, 2010. "The sustainability of trade balances in Sub-Saharan Africa: panel cointegration tests with cross-section dependence," MPRA Paper 24054, University Library of Munich, Germany.
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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