Are Indian Exports And Imports Cointegrated?
The purpose of this study is to investigate empirically the presence of an equilibrium relationship between the logarithms of Indian exports and imports between 1949/50 and 2004/2005, using the unit-root, cointegration approach. To ascertain robustness, exports and imports measured in current prices but in two currencies, Indian rupee and US dollar have been analyzed. Moreover, since the sample comprises data from both the fixed and freely floating exchange rate periods, the tests have also been performed allowing for a one-time structural break in 1992/93. The results indicate no-cointegration between exports and imports. The lack of cointegration means that Indian macroeconomic policies have been ineffective in bringing exports and imports into long-run equilibrium and India is in violation of her international budget constraint.
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Volume (Year): 8 (2008)
Issue (Month): 2 ()
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References listed on IDEAS
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- Tuck Cheong Tang, 2006. "Are Imports And Exports In The Oic Member Countries Cointegrated? A Reexamination," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 14(1), pages 49-79, December.
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- Guisan, M.C., 2004. "Human Capital, Trade and Development in India, China, Japan and other Asian Countries, 1960-2002: Econometric Models and Causality Tests," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 4(3), pages 123-139.
- Manuchehr Irandoust & Johan Ericsson, 2004. "Are Imports and Exports Cointegrated? An International Comparison," Metroeconomica, Wiley Blackwell, vol. 55(1), pages 49-64, 02.
- Dierk Herzer & Nowak-Lehmann Felicitas, 2006. "Is there a long-run relationship between exports and imports in Chile?," Applied Economics Letters, Taylor & Francis Journals, vol. 13(15), pages 981-986.
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