Trade and Growth in the Pacific Islands - Empirical Evidence from the Bounds Test to Level Relationships and Granger Causality Tests
Although the relationship between international trade and economic growth has found a wide application area in the literature over the years, further attention is needed for small island economies. This study employs the bounds test for Level Relationships and Granger causality tests to investigate a long-run equilibrium relationship between international trade and real income growth, and the direction of causality among themselves in three selected Pacific Islands: Fiji, Papua New Guinea and Solomon Islands. Results reveal that a long run equilibrium relationship can be inferred between international trade and economic growth in the case of Fiji and Solomon Islands whereas economic growth is cointegrated only with exports of goods and services in Papua New Guinea. Granger causality test results show that there are bidirectional causality between exports and economic growth, and between exports and imports in Fiji Islands. Economic growth in Solomon Islands stimulates a growth in exports of goods and services, and exports stimulates a growth in imports of goods and services. No causal relationship has been obtained between international trade (both exports and imports) and economic growth in the case of Solomon Islands. The major finding of this study is that trade-led growth hypothesis cannot be inferred for the Pacific Islands.
Volume (Year): (2010)
Issue (Month): 4 (December)
|Contact details of provider:|| Postal: |
Phone: 004 021 3188148
Fax: 004 021 3188148
Web page: http://www.ipe.ro/
More information through EDIRC
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.:
- Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
- 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 678-88, November.
- Marin, Dalia, 1992. "Is the Export-led Growth Hypothesis Valid for Industrialized Countries?," Munich Reprints in Economics 3112, University of Munich, Department of Economics.
- Marin, Dalia, 1990. "Is the Export-Led Growth Hypothesis Valid for Industrialized Countries?," CEPR Discussion Papers 362, C.E.P.R. Discussion Papers.
- Salih Katircioglu, 2009. "Tourism, trade and growth: the case of Cyprus," Applied Economics, Taylor & Francis Journals, vol. 41(21), pages 2741-2750.
- Lokman Gunduz & Abdulnasser Hatemi-J, 2005. "Is the tourism-led growth hypothesis valid for Turkey?," Applied Economics Letters, Taylor & Francis Journals, vol. 12(8), pages 499-504.
- Paresh Kumar Narayan & Seema Narayan, 2005. "Are exports and imports cointegrated? Evidence from 22 least developed countries," Applied Economics Letters, Taylor & Francis Journals, vol. 12(6), pages 375-378.
- M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
- Jacint Balaguer & Manuel Cantavella-Jordá, 2000.
"Tourism As A Long-Run Economic Growth Factor: The Spanish Case,"
Working Papers. Serie EC
2000-10, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Jacint Balaguer & Manuel Cantavella-Jorda, 2002. "Tourism as a long-run economic growth factor: the Spanish case," Applied Economics, Taylor & Francis Journals, vol. 34(7), pages 877-884.
- Jordan Shan & Fiona Sun, 1998. "Export-led growth hypothesis for Australia: an empirical re-investigation," Applied Economics Letters, Taylor & Francis Journals, vol. 5(7), pages 423-428.
- Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
- Paresh Kumar Narayan & Russell Smyth, 2004. "The relationship between the real exchange rate and balance of payments: empirical evidence for China from cointegration and causality testing," Applied Economics Letters, Taylor & Francis Journals, vol. 11(5), pages 287-291.
When requesting a correction, please mention this item's handle: RePEc:rjr:romjef:v::y:2010:i:4:p:88-101. 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: (Corina Saman)
If references are entirely missing, you can add them using this form.