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Long run analysis of trade openness on economic growth for Pakistan; Evidence from standard and optimal time series tests

Author

Listed:
  • Fahad Israr

    (Department of Economics, Universidade de Évora, Portugal)

  • Miguel Rocha de Sousa

    () (Department of Economics; Center for Research in Advanced Studies in Management and Economics (CEFAGE); Research Center in Political Science (CICP); Universidade de Évora, Portugal)

Abstract

This study examines the long run effect of trade openness on economic growth for Pakistan using annual data for the period 1972-2016. The long run model is estimated using several standard and optimal single equation estimates. The standard long run elasticities provide significant positive long run effects of trade openness on economic growth. The autoregressive distributive lag model optimal estimate by accommodating structural break in the series validate the cointegration among variables providing weak or no support for the long run effect of trade openness on economic growth. The estimate of the model using generalized method of moments technique and its rolling window estimation overwhelms the evidence of weak or no support by providing significantly positive long run effects of trade openness on economic growth. The results appear to support the new growth theories for Pakistan in which increasing openness helps domestic economy to grow.

Suggested Citation

  • Fahad Israr & Miguel Rocha de Sousa, 2018. "Long run analysis of trade openness on economic growth for Pakistan; Evidence from standard and optimal time series tests," CEFAGE-UE Working Papers 2018_01, University of Evora, CEFAGE-UE (Portugal).
  • Handle: RePEc:cfe:wpcefa:2018_01
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Trade openness; Economic growth; ARDL; Structural breaks; GMM;

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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