Examining Patterns of Bilateral Trade between Australia and Colombia by Using Cointegration Analysis and Error-Correction Models

Maria Cortes ()
Additional contact information
Maria Cortes: Universidad Del Valle

Economics Working Papers from School of Economics, University of Wollongong, NSW, Australia

Abstract: The main objective of this paper is to understand whether there is a long-term relationship between Australia and Colombian imports by using macroeconomic fundamentals such as the real exchange rate, income, population and openness. We use multivariate cointegration techniques and error correction models along with time-series data (1960-2005). We focus on testing for cointegration in the presence of structural breaks. The findings suggest that the value of Australian imports from Colombia is cointegrated with three economic series: income of both participating countries and the Colombian population. The real value of Colombian imports from Australia is cointegrated with the real bilateral exchange rate and total Colombian world imports. The relationship between the value of bilateral imports and the cointegrated series can be seen as long-running bilateral import elasticities. High coefficients of the cointegrated variables indicate that opportunities exist to improve long-term trade relationships between the two countries.

Keywords: trade; gravity model; Latin America; Australia; cross-sectional data. (search for similar items in EconPapers)
JEL-codes: F10 F14 F17 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2007
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.uow.edu.au/content/groups/public/@web/@ ... ts/doc/uow041449.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uow:depec1:wp07-20

Access Statistics for this paper

More papers in Economics Working Papers from School of Economics, University of Wollongong, NSW, Australia School of Economics, University of Wollongong, Northfields Avenue, Wollongong NSW 2522 Australia. Contact information at EDIRC.
Bibliographic data for series maintained by Peter Siminski ( this e-mail address is bad, please contact ).