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Imports-Exports Correlation: A New Puzzle?

Author

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  • Ricardo Bebczuk

    (Central Bank of Argentina)

Abstract

This paper shows that a puzzling yet strong correlation exists between imports and exports. Cross-section and time-series analysis for the broadest possible country sample (159 countries over 1960-2006) attests to the robustness of this finding, even though causality is not explored in depth. After ruling out common factors driving simultaneously imports and exports, as well as systematic government interventions, we favor two weighty explanations. The first one is the presence of international financial constraints, in the spirit of the Feldstein-Horioka literature. However, we contend that this is at most an incomplete rationale, and thus put forward a classic (but often neglected) argument relating exports, imports, and economic growth in the short and the long-run. Our results open room to rich and provocative policy implications as well as to the reinterpretation of commonly accepted notions in the analysis of open economies.

Suggested Citation

  • Ricardo Bebczuk, 2008. "Imports-Exports Correlation: A New Puzzle?," BCRA Working Paper Series 200833, Central Bank of Argentina, Economic Research Department.
  • Handle: RePEc:bcr:wpaper:200833
    as

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    References listed on IDEAS

    as
    1. Dierk Herzer & Felicitas Nowak-Lehmann D., 2005. "Are exports and imports of Chile cointegrated?," Ibero America Institute for Econ. Research (IAI) Discussion Papers 111, Ibero-America Institute for Economic Research.
    2. Ricardo Bebczuk & Klaus Schmidt-Hebbel, 2010. "Revisiting the Feldstein-Horioka Puzzle: An institutional sector view," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 69-104, January-D.
    3. Arize, Augustine C., 2002. "Imports and exports in 50 countries: Tests of cointegration and structural breaks," International Review of Economics & Finance, Elsevier, vol. 11(1), pages 101-115, April.
    4. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    5. Penélope López & A. Thirlwall, 2006. "Trade liberalization, the income elasticity of demand for imports, and growth in Latin America," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 29(1), pages 41-61.
    6. Iwamoto, Yasushi & van Wincoop, Eric, 2000. "Do Borders Matter? Evidence from Japanese Regional Net Capital Flows," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 241-269, February.
    7. Lopez, Ramon & Thomas, Vinod, 1988. "Imports and growth in Africa," Policy Research Working Paper Series 20, The World Bank.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    cross-section analysis; economic growth; exports; imports; international financial constraints; time-series analysis;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F10 - International Economics - - Trade - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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