Imports-Exports Correlation: A New Puzzle?
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.
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- Bebczuk, Ricardo & Schmidt-Hebbel, Klaus, 2006.
"Revisiting the Feldstein-Horioka Puzzle: An Institutional Sector View,"
1802, University Library of Munich, Germany.
- 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.
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- Martin Feldstein & Charles Horioka, 1979.
"Domestic Savings and International Capital Flows,"
NBER Working Papers
0310, National Bureau of Economic Research, Inc.
- Lopez, Ramon & Thomas, Vinod, 1988. "Imports and growth in Africa," Policy Research Working Paper Series 20, The World Bank.
- 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.
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