Cointegration Analysis of Exports and Imports: The Case of Pakistan Economy
This paper analyzes the long run association between Pakistan’s exports and imports from 1972 to 2012. The results of both the Engle and Granger (1987) and Johansen (1991, 1995) cointegration reveal a long run relationship between the two variables. The error correction model results demonstrate that both of the variables converge towards long run equilibrium. This specifies the effectiveness of macrocosmic policies in stabilizing the international trade balance.
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