Estimating export demand equations in selected Asian countries
Purpose - The purpose of this paper is to utilize the new specification proposed by Rao and Singh to estimate export demand equations for Asian developing countries, Design/methodology/approach - The augmented Dicky-Fuller method is applied to test the time-series properties of the variables. The time-series techniques of Phillip-Hansen's fully modified ordinary least squares and Johansen's maximum likelihood are used with annual data from 1970 to 2007. The Granger causality test determines the causality direction between income, relative prices and exports. Findings - The paper confirms that there exists a long-run cointegrating relationship between real exports, real income of trading partners and relative prices. The long-run income elasticities range between 1 and 1.3 and the relative price elasticities range between -1 and -1.4. Our Granger causality results imply that in the long-run income and relative prices Granger cause exports in these countries. Research limitations/implications - Structural breaks and trade shock analysis were ignored. Practical implications - The results imply that exports should be treated as an engine of growth in the Asian developing countries and the export promotion policies such as subsidies, special credits and tax concessions should be encouraged. The relative price elasticities imply that exports are competitive in the international market and these countries have the option to devalue their currency to enhance export earnings. Although the real devaluation of the currencies will push import costs high, eventually this motivates the local firms to undertake alternative options, for instance, import substitution. Further, the gains resulting from the export growth policies will be attractive. Originality/value - The paper assesses the magnitudes of export elasticities with a specification that includes exchange rate in relative price variable.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 4 (2011)
Issue (Month): 1 (February)
|Contact details of provider:|| Web page: http://www.emeraldinsight.com|
|Order Information:|| Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK|
Web: http://www.emeraldinsight.com/jcefts.htm Email:
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Riedel, James, 1984. "Trade as the Engine of Growth in Developing Countries, Revisited," Economic Journal, Royal Economic Society, vol. 94(373), pages 56-73, March.
- Saten Kumar, 2010. "Efficacy of Monetary Policy in Curtailing Consumption: Empirical Evidence from Fiji," The IUP Journal of Monetary Economics, IUP Publications, vol. 0(3), pages 60-68, August.
- Kumar, Saten & Singh, Rup, 2009.
"Some Empirical Evidence on the Demand for Money in the Pacific Island Countries,"
18703, University Library of Munich, Germany.
- Rup Singh, 2010. "Some empirical evidence on the demand for money in the Pacific Island countries," Studies in Economics and Finance, Emerald Group Publishing, vol. 27(3), pages 211-222, August.
- repec:eme:ceftpp:v:1:y:2009:i:3:p:100-109 is not listed on IDEAS
- Anoruo, Emmanuel & Kumar, Saten & DiPietro, Bill, 2007. "A Cointegration Analysis of Investment Output Ratio in Bangladesh," MPRA Paper 19338, University Library of Munich, Germany.
- Guisan, M.Carmen & Cancelo, M.Teresa, 2002. "Econometric Models of Foreign Trade in OECD Countries," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 2(2), pages 65-81.
- repec:eme:jespps:v:28:y:2001:i:6:p:378-396 is not listed on IDEAS
- Kumar Saten, 2009. "Structural Breaks and Exports in the Philippines," Global Economy Journal, De Gruyter, vol. 9(2), pages 1-9, June.
- Singh, Rup & Kumar, Saten, 2007.
"Application of the Alternative Techniques to Estimate Demand for Money in Developing Countries,"
19295, University Library of Munich, Germany.
- Rup Singh & Saten Kumar, 2012. "Application of the alternative techniques to estimate demand for money in developing countries," Journal of Developing Areas, Tennessee State University, College of Business, vol. 46(2), pages 43-63, July-Dece.
- Saten Kumar & Don J. Webber & Scott Fargher, 2012. "Testing the validity of the Feldstein--Horioka puzzle for Australia," Applied Economics, Taylor & Francis Journals, vol. 44(5), pages 599-605, February.
- A. J. Abbott & G. De Vita, 2002. "Long-run price and income elasticities of demand for Hong Kong exports: a structural cointegrating VAR approach," Applied Economics, Taylor & Francis Journals, vol. 34(8), pages 1025-1032.
- Lewis, W Arthur, 1980.
"The Slowing Down of the Engine of Growth,"
American Economic Review,
American Economic Association, vol. 70(4), pages 555-564, September.
- B Bhaskara Rao & Rup Singh, 2005.
"Estimating Export Equations,"
- Bahmani-Oskooee, Mohsen & Mohtadi, Hamid & Shabsigh, Ghiath, 1991. "Exports, growth and causality in LDCs : A re-examination," Journal of Development Economics, Elsevier, vol. 36(2), pages 405-415, October.
- Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
- Bodman, Philip M, 1996. "On Export-Led Growth in Australia and Canada: Cointegration, Causality and Structural Stability," Australian Economic Papers, Wiley Blackwell, vol. 35(67), pages 282-299, December.
- Bagala Biswal & Urvashi Dhawan, 1998. "Export-led growth hypothesis: cointegration and causality analysis for Taiwan," Applied Economics Letters, Taylor & Francis Journals, vol. 5(11), pages 699-701.
- Saten Kumar, 2007. "The Stability of Demand for Money in Bangladesh: Time Series Methods," The IUP Journal of Monetary Economics, IUP Publications, vol. 0(2), pages 27-35, May.
- Marquez, Jaime & McNeilly, Caryl, 1988. "Income and Price Elasticities for Exports of Developing Countries," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 306-314, May.
- Abu-Qarn, Aamer & Abu-Bader, Suleiman, 2001.
"The Validity of the ELG Hypothesis in the MENA Region: Cointegration and Error Correction Model Analysis,"
1116, University Library of Munich, Germany.
- Aamer Abu-Qarn & Suleiman Abu-Bader, 2004. "The validity of the ELG hypothesis in the MENA region: cointegration and error correction model analysis," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1685-1695.
- Aamer Abu-Qarn & Suleiman Abu-Bader, 2001. "The Validity of the ELG Hypothesis in the MENA Region: Cointegration and Error Correction Model Analysis," Working Papers 134, Ben-Gurion University of the Negev, Department of Economics.
- Colombatto, Enrico, 1990. "An Analysis of Exports and Growth in LDCs," Kyklos, Wiley Blackwell, vol. 43(4), pages 579-597.
- Saten Kumar & Don J. Webber & Scott Fargher, 2012. "Wagner's Law revisited: cointegration and causality tests for New Zealand," Applied Economics, Taylor & Francis Journals, vol. 44(5), pages 607-616, February.
- Mohsen Bahmani-Oskooee & Janardhanan Alse, 1994. "Short-Run versus Long-Run Effects of Devaluation: Error-Correction Modeling and Cointegration," Eastern Economic Journal, Eastern Economic Association, vol. 20(4), pages 453-464, Fall.
- Abdelhak S. Senhadji & Claudio E. Montenegro, 1999. "Time Series Analysis of Export Demand Equations: A Cross-Country Analysis," IMF Staff Papers, Palgrave Macmillan, vol. 46(3), pages 1-2.
- Nowak-Lehmann Felicitas, 2004. "Different approaches of modelling reaction lags: how do Chilean manufacturing exports react to movements of the real exchange rate?," Applied Economics, Taylor & Francis Journals, vol. 36(14), pages 1547-1560.
- Peter C. B. Phillips & Bruce E. Hansen, 1990. "Statistical Inference in Instrumental Variables Regression with I(1) Processes," Review of Economic Studies, Oxford University Press, vol. 57(1), pages 99-125.
- Kumar, Saten, 2009. "A Re-examination of Private Consumption in Fiji," MPRA Paper 18706, University Library of Munich, Germany.
- Saten Kumar, 2008. "Income and Price Elasticities of Exports in Philippines," The IUP Journal of Applied Economics, IUP Publications, vol. 0(6), pages 40-46, November.
- Rose, Andrew K., 1990. "Exchange rates and the trade balance : Some evidence from developing countries," Economics Letters, Elsevier, vol. 34(3), pages 271-275, November.
- Kumar, Saten & Manoka, Billy, 2008. "Testing the Stability of Demand for Money in Tonga," MPRA Paper 19300, University Library of Munich, Germany.
- David Greenaway & David Sapsford, "undated".
"What does Liberalisation do for Exports and Growth?,"
ec4/94, Department of Economics, University of Lancaster.
- David Greenaway & David Sapsford, 1994. "What does liberalisation do for exports and growth?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(1), pages 152-174, March.
- Irene Henriques & Perry Sadorsky, 1996. "Export-Led Growth or Growth-Driven Exports? The Canadian Case," Canadian Journal of Economics, Canadian Economics Association, vol. 29(3), pages 540-555, August.
- Urvashi Dhawan & Bagala Biswal, 1999. "Re-examining export-led growth hypothesis: a multivariate cointegration analysis for India," Applied Economics, Taylor & Francis Journals, vol. 31(4), pages 525-530.
- Ahmad, Jaleel & Harnhirun, Somchai, 1995. "Unit roots and cointegration in estimating causality between exports and economic growth: Empirical evidence from the ASEAN countries," Economics Letters, Elsevier, vol. 49(3), pages 329-334, September.
- Jamal Husein, 2009. "Export-led growth hypothesis: a multivariate cointegration and causality evidence for Jordan," Journal of Developing Areas, Tennessee State University, College of Business, vol. 42(2), pages 253-266, January-M.
- Ahmad, Jaleel & Kwan, Andy C. C., 1991. "Causality between exports and economic growth : Empirical evidence from Africa," Economics Letters, Elsevier, vol. 37(3), pages 243-248, November.
When requesting a correction, please mention this item's handle: RePEc:eme:ceftpp:v:4:y:2011:i:1:p:5-16. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginia Chapman)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.