 Measuring comparative advantages in the Euro AreaIoanna Konstantakopoulou and Mike Tsionas Economic Modelling, 2019, vol. 76, issue C, 260-269 Abstract: A core principle in international economics is that the specialization of an economy on the basis of its comparative advantages leads to gains from trade. However, there is no empirical work directly linking comparative advantages and export specialization. This paper investigates whether the comparative advantages of countries have driven their export specialization. Panel unit root tests, panel cointegration tests, and panel causality tests are used to examine this relationship. We also use panel estimation methods that mitigate heterogeneity, cross-sectional dependence and endogeneity. The empirical analysis is based on annual Euro Area data for the period 1995–2016. Empirical results indicate that comparative advantages positively affect export specialization. Heterogeneous panel causality analysis results support that there is unidirectional panel causality running from comparative advantages to export specialization in most countries; and a reverse causal relation in Greece, Italy, and Portugal. Finally, we detect bidirectional causality in Ireland, Lithuania, Malta, and Slovakia. Keywords: Exports competitiveness; Export specialization; Comparative advantages; Panel Granger causality; FMOLS; CCE-MG; CCE-PMG; GMM estimator (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:76:y:2019:i:c:p:260-269 DOI: 10.1016/j.econmod.2018.08.005 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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