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Trade Reforms And Breakpoints In Australia’S Manufactured Trade: An Application Of The Zivot And Andrews Model

Listed author(s):
  • JAYANTHAKUMARAN, Kankesu
  • PAHLAVANI; Mosayeb
  • Frank NERI, Frank

Trade liberalization is expected to increase imports but also exports via reduced input costs and increased domestic competition. This paper investigates whether this is the case for Australian manufactured goods. We begin by briefly describing the trends in the effective rate of protection, imports and exports in Australia over the last 30 years and then investigate the existence of major structural breaks in the imports and exports series by applying the Zivot and Andrews (1992 )test, using annual time series data from 1968/69 to 2003/2004. We find that a significant structural break occurred for imports in 1988/1989, which coincides with the introduction of major trade liberalization policy. We also find a significant structural break for exports with the three-year lag in 1992/1993.

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File URL: http://www.usc.es/economet/reviews/ijaeqs425.pdf
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Article provided by Euro-American Association of Economic Development in its journal International Journal of Applied Econometrics and Quantitative Studies.

Volume (Year): 4 (2007)
Issue (Month): 2 ()
Pages: 69-78

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Handle: RePEc:eaa:ijaeqs:v:4:y2007:i:2_5
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  1. Eric Zivot & Donald W.K. Andrews, 1990. "Further Evidence on the Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Cowles Foundation Discussion Papers 944, Cowles Foundation for Research in Economics, Yale University.
  2. VALADKHANI, A. & LAYTON, Allan P. & PAHLAVANI, M., 2005. "Multiple Structural Breaks In Australia’S Macroeconomic Data: An Application Of The Lumsdaine And Papell Test," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 2(3), pages 31-44.
  3. Kankesu Jayanthakumaran, 2002. "Trade Reforms And Performance: Evidence From Australian Manufacturing Between 1989/90 And 1996/97," Economic Papers, The Economic Society of Australia, vol. 21(2), pages 29-43, 06.
  4. Amelia Santos-Paulino & A. P. Thirlwall, 2004. "The impact of trade liberalisation on exports, imports and the balance of payments of developing countries," Economic Journal, Royal Economic Society, vol. 114(493), pages 50-72, 02.
  5. Paresh Kumar Narayan & Seema Narayan, 2004. "Is There A Long-Run Relationship Between Exports And Imports? Evidence From Two Pacific Island Countries," Economic Papers, The Economic Society of Australia, vol. 23(2), pages 152-164, 06.
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