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Trade Between Euro Zone and Arab Countries: a Panel Study

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  • Harb, Nasri

Abstract

We construct an aggregate data panel to estimate price and income elasticities of the Arab countries imports from and exports to euro zone. We study the non-stationarity of our series and verify the cointegration hypothesis among the variables using Pedroni's heterogeneous panel cointegration tests (2004). The panel data circumvent the problem of short span sample and increase the power of the non stationarity tests. Then, we estimate the idiosyncratic and panel cointegrating vectors using DOLS (Kao and Chiang, 2000), FMOLS (Phillips and Hansen, 1990) and group-mean DOLS and FMOLS developed by Pedroni (2000, 2001). Our variables are shown to be cointegrated. Arab imports from Euro zone countries are income inelastic, but price elastic. Results of export function are not conclusive and depend on the used estimator.

Suggested Citation

  • Harb, Nasri, 2006. "Trade Between Euro Zone and Arab Countries: a Panel Study," MPRA Paper 13675, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:13675
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    References listed on IDEAS

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    Cited by:

    1. Güzin Bayar, 2022. "Turkey's sectoral exports: A competitiveness approach," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 2268-2289, April.
    2. James J. Forest & Paul Turner, 2013. "Alternative estimators of cointegrating parameters in models with nonstationary data: an application to US export demand," Applied Economics, Taylor & Francis Journals, vol. 45(5), pages 629-636, February.
    3. Chiu, Yi-Bin & Lee, Chien-Chiang & Sun, Chia-Hung, 2010. "The U.S. trade imbalance and real exchange rate: An application of the heterogeneous panel cointegration method," Economic Modelling, Elsevier, vol. 27(3), pages 705-716, May.
    4. Güzin Bayar, 2018. "Estimating export equations: a survey of the literature," Empirical Economics, Springer, vol. 54(2), pages 629-672, March.

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    More about this item

    Keywords

    Imports; Exports; Time series; Panel Cointegration; DOLS; FMOLS;
    All these keywords.

    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F30 - International Economics - - International Finance - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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