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Trade between Euro zone and Arab countries: a panel study

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  • Nasri Harb

Abstract

We construct an aggregate data panel to estimate price and income elasticities of the Arab countries imports from and exports to Euro zone. We study the nonstationarity of our series and verify the cointegration hypothesis among the variables using Pedroni's (2004) heterogeneous panel cointegration tests. The panel data circumvent the problem of short span sample and increase the power of the nonstationarity tests. Then, we estimate the idiosyncratic and panel cointegrating vectors using dynamic ordinary least squares (DOLS) (Kao and Chiang, 2000), fully modified ordinary least squares (FMOLS) (Phillips and Hansen, 1990) and group mean DOLS and FMOLS developed by Pedroni (2000, 2001). Our variables are shown to be cointegrated. Arab imports from Euro zone countries are income inelastic, but price elastic. Results of export function are not conclusive and depend on the used estimator.

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  • Nasri Harb, 2007. "Trade between Euro zone and Arab countries: a panel study," Applied Economics, Taylor & Francis Journals, vol. 39(16), pages 2099-2107.
    • Handle: RePEc:taf:applec:v:39:y:2007:i:16:p:2099-2107
    DOI: 10.1080/00036840600722307
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    1. Chihwa Kao & Min‐Hsien Chiang & Bangtian Chen, 1999. "International R&D Spillovers: An Application of Estimation and Inference in Panel Cointegration," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 691-709, November.
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    Cited by:

    1. Güzin Bayar, 2022. "Turkey's sectoral exports: A competitiveness approach," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 2268-2289, April.
    2. James J. Forest & Paul Turner, 2013. "Alternative estimators of cointegrating parameters in models with nonstationary data: an application to US export demand," Applied Economics, Taylor & Francis Journals, vol. 45(5), pages 629-636, February.
    3. Chiu, Yi-Bin & Lee, Chien-Chiang & Sun, Chia-Hung, 2010. "The U.S. trade imbalance and real exchange rate: An application of the heterogeneous panel cointegration method," Economic Modelling, Elsevier, vol. 27(3), pages 705-716, May.
    4. Güzin Bayar, 2018. "Estimating export equations: a survey of the literature," Empirical Economics, Springer, vol. 54(2), pages 629-672, March.

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    More about this item

    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F30 - International Economics - - International Finance - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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