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Output growth and the variability of exports and imports growth: international evidence from Granger causality tests

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  • Afxentiou, Panos
  • Serletis, Apostolos

Abstract

Economic development was from the very beginning the focus of classical political economy and presently retains its original human welfare mission and intellectual attraction through insightful anthropological, sociological, and historical investigations.1 Within the context of complex and constantly evolving sociospheres, the objective of a sustained better life for the masses is enhanced, according to Nobel Prize winner Amartya K. Sen (1983, 1988), by functionings and entitlements which cannot be implemented without a public commitment and a deep government involvement. Notwithstanding the inevitability of semantical differences, the real challenge of development does not lie in eliminating definitional disputes pertaining to the objective of development but in illuminating those pertinent instrumental relations which are relevant in each social milieu, and which, when properly activated, generate an internal development dynamic. Such a dynamic would exhibit characteristics of uniformity in countries with high degrees of similarity in human and natural resources, in institutions and in individual preferences. If advanced industrial countries converge toward similar patterns, the same cannot be observed in developing countries whose differences are more pronounced than their similarities. The task of establishing meaningful patterns of uniformity in the highly differentiated developing world is not easy, but if accomplished, it would guarantee substantial benefits in the formulation of effective strategies and policies. An area in which the search for such patterns goes on unabated is that of international trade and openness. Forces of dependence, autarky, balance of payments, international competition, vulnerability to external shocks affect the objective of developing countries to achieve some degree of balanced growth,2 and most certainly influence their patterns of trade. Although these forces are important, they are beyond the scope of this paper, which focuses on the investigation of possible trade patterns and their impact on growth. In the course of this investigation the paper is organized as follows. In the next section the role of openness is examined along with citations of empirical studies that analyze the impact of export growth and export growth volatility on the growth of GNP. In the third section the rationale of Granger causality, which constitutes the core of the paper, is presented, followed by short sections on unit root tests, cointegration tests, and volatility tests that are accompanied by a brief analysis of the respective statistical results. In the final section the conclusions of the paper are summarized.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1750.

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Date of creation: 2000
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Publication status: Published in The Developing Economies 2.38(2000): pp. 141-163
Handle: RePEc:pra:mprapa:1750

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  1. John Y. Campbell & Pierre Perron, 1991. "Pitfalls and Opportunities: What Macroeconomists Should Know About Unit Roots," NBER Technical Working Papers 0100, National Bureau of Economic Research, Inc.
  2. Lim, David, 1976. "Export Instability and Economic Growth: A Return to Fundamentals," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 38(4), pages 311-22, November.
  3. Basu, Parantap & McLeod, Darryl, 1991. "Terms of trade fluctuations and economic growth in developing economies," Journal of Development Economics, Elsevier, vol. 37(1-2), pages 89-110, November.
  4. Peter C.B. Phillips, 1985. "Time Series Regression with a Unit Root," Cowles Foundation Discussion Papers 740R, Cowles Foundation for Research in Economics, Yale University, revised Feb 1986.
  5. James G. MacKinnon, 1992. "Approximate Asymptotic Distribution Functions for Unit Roots and Cointegration Tests," Working Papers, Queen's University, Department of Economics 861, Queen's University, Department of Economics.
  6. Tim Bollerslev, 1986. "Generalized autoregressive conditional heteroskedasticity," EERI Research Paper Series EERI RP 1986/01, Economics and Econometrics Research Institute (EERI), Brussels.
  7. Gonzalo, Jesus, 1994. "Five alternative methods of estimating long-run equilibrium relationships," Journal of Econometrics, Elsevier, Elsevier, vol. 60(1-2), pages 203-233.
  8. Tibor Scitovsky, 1954. "Two Concepts of External Economies," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 62, pages 143.
  9. Jagdish N. Bhagwati, 1978. "Anatomy and Consequences of Exchange Control Regimes," NBER Books, National Bureau of Economic Research, Inc, number bhag78-1, January.
  10. Gyimah-Brempong, Kwabena, 1991. "Export Instability and Economic Growth in Sub-Saharan Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 39(4), pages 815-28, July.
  11. Chow, Peter C. Y., 1987. "Causality between export growth and industrial development : Empirial evidence from the NICs," Journal of Development Economics, Elsevier, vol. 26(1), pages 55-63, June.
  12. Kunst, Robert M & Marin, Dalia, 1989. "On Exports and Productivity: A Causal Analysis," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 699-703, November.
  13. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, Econometric Society, vol. 49(4), pages 1057-72, June.
  14. Moran, Cristian, 1983. "Export fluctuations and economic growth : An empirical analysis," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 195-218.
  15. Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, Econometric Society, vol. 50(4), pages 987-1007, July.
  16. Glezakos, Constantine, 1973. "Export Instability and Economic Growth: A Statistical Verification," Economic Development and Cultural Change, University of Chicago Press, vol. 21(4), pages 670-78, Part I Ju.
  17. Bahmani-Oskooee, Mohsen & Mohtadi, Hamid & Shabsigh, Ghiath, 1991. "Exports, growth and causality in LDCs : A re-examination," Journal of Development Economics, Elsevier, vol. 36(2), pages 405-415, October.
  18. Sen, Amartya, 1983. "Development: Which Way Now?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 93(372), pages 742-62, December.
  19. Pantula, Sastry G & Gonzalez-Farias, Graciela & Fuller, Wayne A, 1994. "A Comparison of Unit-Root Test Criteria," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 12(4), pages 449-59, October.
  20. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, Elsevier, vol. 10(2), pages 139-162.
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Cited by:
  1. Hadjinikolov, Dimitar, 2010. "Глобалното Направление На Общата Търговска Политика На Ес В Началото На Новия Век
    [Global direction of EU common commercial policy at the beginning of the new century]
    ," MPRA Paper 25244, University Library of Munich, Germany.

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