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Impact of Trade Openness on Output Growth: Co integration and Error Correction Model Approach

Author

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  • Asma Arif

    (University of Wah, Department of Economics, Wah Cantt, Pakistan)

  • Hasnat Ahmad

    (Curtin Business School, Curtin University, Australia)

Abstract

This study analyzed the long run relationship between trade openness and output growth for Pakistan using annual time series data for 1972-2010. This study follows the Engle and Granger co integration analysis and error correction approach to analyze the long run relationship between the two variables. The Error Correction Term (ECT) for output growth and trade openness is significant at 5% level of significance and indicates a positive long run relation between the variables. This study has also analyzed the causality between trade openness and output growth by using granger causality test. The results of granger causality show that there is a bi-directional significant relationship between trade openness and economic growth.

Suggested Citation

  • Asma Arif & Hasnat Ahmad, 2012. "Impact of Trade Openness on Output Growth: Co integration and Error Correction Model Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 2(4), pages 379-385.
    • Handle: RePEc:eco:journ1:2012-04-1
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    References listed on IDEAS

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    Cited by:

    1. Suleman Ghaffar & Humaira Munir & Shahbaz Nawaz & Anam Javaid, 2019. "The Impact of International Trade on Economic Growth: A Case Study of Pakistan," Asian Journal of Social Sciences and Management Studies, Asian Online Journal Publishing Group, vol. 6(2), pages 15-22.
    2. Maria Khan, 2021. "Effect of Natural Resources on Economic Growth in Pakistan: A Time Series Analysis," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 9(1), pages 29-47, March.
    3. Ibrahim Ngouhouo & Tii Njivukuh Nchofoung, 2021. "Does Trade Openness Affects Employment in Cameroon?," Foreign Trade Review, , vol. 56(1), pages 105-116, February.
    4. Yeboah Asuamah, Samuel, 2016. "Modelling the effect of climate change and globalisation on the manufacturing sector of Ghana," MPRA Paper 70108, University Library of Munich, Germany.
    5. Mrs. Mary Modupe Fasoranti, 2014. "Trade Openness and Cocoa Output in Ondo State," Business and Economic Research, Macrothink Institute, vol. 4(2), pages 186-196, December.

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    More about this item

    Keywords

    Trade openness; output growth; cointegration; error correction model;
    All these keywords.

    JEL classification:

    • F00 - International Economics - - General - - - General
    • F1 - International Economics - - Trade

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