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Export-led growth hypothesis for Australia: an empirical re-investigation

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  • Jordan Shan
  • Fiona Sun
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    Abstract

    The export-led growth hypothesis is tested using quarterly time series data for Australia by constructing a vector autoregression (VAR) model. The Granger no-causality procedure developed by Toda and Yamamoto (Journal of Econometrics, 66, 225-50, 1995) was applied to test the causality link between real export growth and real manufacturing output growth. Three distinct features in this paper stand out compared to earlier studies on the case of Australia: first, we have gone beyond the traditional two-variable relationship by building a five-variable VAR model in the production function context to avoid the possible specification bias; second, we follow Riezman, Whiteman and Summers (Empirical Economics, 21, 77-110, 1996) to test the hypothesis while controlling for the growth of imports to avoid producing a spurious causality result; and finally, the methodology by Toda and Yamamoto is expected to improve the standard F -statistics in the causality test process. Two principle results emerge from our research. First, no evidence was found for the export-led growth hypothesis in Australia; second, when applying a longer lag structure, we found evidence of a one-way Granger causality running from manufacturing growth to exports growth.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Applied Economics Letters.

    Volume (Year): 5 (1998)
    Issue (Month): 7 ()
    Pages: 423-428

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    Handle: RePEc:taf:apeclt:v:5:y:1998:i:7:p:423-428

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    Cited by:
    1. Soytas, Ugur & Sari, Ramazan, 2006. "Energy consumption and income in G-7 countries," Journal of Policy Modeling, Elsevier, vol. 28(7), pages 739-750, October.
    2. Banga, Rashmi & Das, Abhijit, 2010. "Role of trade policies in growth of Indian manufacturing sector," MPRA Paper 35198, University Library of Munich, Germany.
    3. Yuan, Jia-Hai & Kang, Jian-Gang & Zhao, Chang-Hong & Hu, Zhao-Guang, 2008. "Energy consumption and economic growth: Evidence from China at both aggregated and disaggregated levels," Energy Economics, Elsevier, vol. 30(6), pages 3077-3094, November.
    4. Katircioglu, Salih & Eminer, Fehiman & Aga, Mehmet & Ozyigit, Ahmet, 2010. "Trade and Growth in the Pacific Islands - Empirical Evidence from the Bounds Test to Level Relationships and Granger Causality Tests," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 88-101, December.
    5. Sato, Sumie & Fukushige, Mototsugu, 2011. "The North Korean economy: Escape from import-led growth," Journal of Asian Economics, Elsevier, vol. 22(1), pages 76-83, February.
    6. Soytas, Ugur & Sari, Ramazan, 2006. "Can China contribute more to the fight against global warming?," Journal of Policy Modeling, Elsevier, vol. 28(8), pages 837-846, November.
    7. Titus Awokuse, 2005. "Exports, economic growth and causality in Korea," Applied Economics Letters, Taylor & Francis Journals, vol. 12(11), pages 693-696.
    8. Naveed H. Naqvi & Christopher Tsoukis, 2003. "Does Public Investment Crowd Out Private Investment? Evidence On Investment And Growth In Asia, 1971-2000," European Research Studies Journal, European Research Studies Journal, vol. 0(1-2), pages 65-80, January -.
    9. Sari, Ramazan & Soytas, Ugur, 2007. "The growth of income and energy consumption in six developing countries," Energy Policy, Elsevier, vol. 35(2), pages 889-898, February.

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