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Cointegration Analysis of Exports and Imports: The Case of Pakistan Economy

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  • Ali, Sharafat

Abstract

This paper analyzes the long run association between Pakistan’s exports and imports from 1972 to 2012. The results of both the Engle and Granger (1987) and Johansen (1991, 1995) cointegration reveal a long run relationship between the two variables. The error correction model results demonstrate that both of the variables converge towards long run equilibrium. This specifies the effectiveness of macrocosmic policies in stabilizing the international trade balance.

Suggested Citation

  • Ali, Sharafat, 2013. "Cointegration Analysis of Exports and Imports: The Case of Pakistan Economy," MPRA Paper 49295, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:49295
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    File URL: https://mpra.ub.uni-muenchen.de/49295/1/MPRA_paper_49295.pdf
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    References listed on IDEAS

    as
    1. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    2. Husted, Steven, 1992. "The Emerging U.S. Current Account Deficit in the 1980s: A Cointegration Analysis," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 159-166, February.
    3. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    4. MacKinnon, James G, 1996. "Numerical Distribution Functions for Unit Root and Cointegration Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 601-618, Nov.-Dec..
    5. M. Ali Kemal & Usman Qadir, 2005. "Real Exchange Rate, Exports, and Imports Movements: A Trivariate Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 44(2), pages 177-195.
    6. Aviral Kumar Tiwari, 2011. "Are exports and imports cointegrated in India and China? An empirical analysis," Economics Bulletin, AccessEcon, vol. 31(1), pages 860-873.
    7. Nasim Shah Shirazi & Turkhan Ali Abdul Manap, 2004. "Exports and Economic Growth Nexus: The Case of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(4), pages 563-581.
    8. Mohammad Afzal, 2008. "Long-Run Relationship Between Imports And Exports: Evidence From Asian Countries," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 53(02), pages 261-278.
    9. Granger, Clive W J, 1986. "Developments in the Study of Cointegrated Economic Variables," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(3), pages 213-228, August.
    10. Manuchehr Irandoust & Johan Ericsson, 2004. "Are Imports and Exports Cointegrated? An International Comparison," Metroeconomica, Wiley Blackwell, vol. 55(1), pages 49-64, February.
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    Cited by:

    1. Antwi-Boateng, Cosmos, 2015. "Is Ghana achieving sustainable trade balance in the participation of international trade? time series assessment for Ghana," MPRA Paper 67268, University Library of Munich, Germany.
    2. Alice Constance Mensah & Ebenezer Okyere, 2018. "Analysis of Ghana,s Imports and Exports," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 4(1), pages 1-6, 01-2018.

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    More about this item

    Keywords

    Exports; Imports; Cointegration; Budget Constraint;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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