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Bilateral Trade and Economic Growth: The Empirical Evidence Between U.S. and South Korea

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  • Kang, Hyunsoo
  • Kennedy, P. Lynn

Abstract

This paper analyzes the relationships between bilateral trade and economic growth in the U.S. and Korean economies. Using quarterly data from 1990 to 2008, the theoretical procedures utilize Ordinary Least Square (OLS) and Seemingly Unrelated Regression (SUR) models under the static model assumption, an Impulse Response Function (IRF) and Forecast Error Variation Decomposition (FEVD) under the Vector Autoregressive (VAR) model, and Granger causality tests. Empirical results indicate a causal relationship between bilateral export growth and economic growth for the U.S. and Korean economies. The export-led growth (ELG) hypothesis is strongly supported by the results of Granger causality tests on Korean exports.

Suggested Citation

  • Kang, Hyunsoo & Kennedy, P. Lynn, 2009. "Bilateral Trade and Economic Growth: The Empirical Evidence Between U.S. and South Korea," Journal of Rural Development/Nongchon-Gyeongje, Korea Rural Economic Institute, vol. 32(2), June.
  • Handle: RePEc:ags:jordng:90684
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    References listed on IDEAS

    as
    1. Marin, Dalia, 1992. "Is the Export-Led.Growth Hypothesis Valid for Industrialized Countries?," The Review of Economics and Statistics, MIT Press, vol. 74(4), pages 678-688, November.
    2. Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 59-73.
    3. Konya, Laszlo, 2006. "Exports and growth: Granger causality analysis on OECD countries with a panel data approach," Economic Modelling, Elsevier, vol. 23(6), pages 978-992, December.
    4. Michael M. Hutchison, 1987. "Korea and export-led growth," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue dec4.
    5. Charles Harvie & Hyun-Hoon Lee, 2003. "Export-led industrialisation and growth: Korea's economic miracle, 1962-1989," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 43(3), pages 256-286, November.
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