Trade Balances and the Terms of Trade in G-7 Countries: Penal Cointegration Approach

Shigeyuki Hamori

Applied Econometrics and International Development, 2008, vol. 8, issue 2, 13-22

Abstract: This paper empirically analyzes the long-run equilibrium between trade balances and the terms of trade using the nonstationary panel data analysis. Empirical results indicate that trade balances and the terms of trade do not have cointegrating relation for G-7 countries. This implies that the deterioration in the terms of trade will not necessarily improve a country's trade balance in the long-run.

Keywords: panel unit root; panel cointegration; Marshall Lerner condition (search for similar items in EconPapers)
JEL-codes: C32 F41 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (11)

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