 A Comparison of Causality Tests Applied to the Bilateral Relationship between Consumption and GDP in the USA and MexicoInternational Journal of Applied Econometrics and Quantitative Studies, 2004, vol. 1, issue 1, 115-130 Abstract: This article compares several methodologies for analysing unidirectional and bi-directional causality between Consumption and GDP in the USA, Mexico and other countries during the period 1960-2000. Bilateral causality is analysed comparing Granger´s test, a modified version of Granger´s test here suggested, TSLS, Hausman´s causality test and other approaches. The main conclusion is that the modified version of Granger´s test performs rather well and that Hausman´s test is very often useful for reinforcing the conclusions of multiple equations models with contemporaneous interdependence. Regarding the bilateral relationship between Consumption and GDP we conclude that there is a moderate degree of contemporaneous relation, with a high degree of dependence of Private Consumption on GDP and a lower dependence in the case of the reverse relation, because GDP is more dependent on supply side conditions than on demand side. This result is relevant for economic policies in less developed countries where very often emphasis is made more in the reverse relations than in the main ones. JEL-codes: C5 C52 E2 O51 O54 O57 (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:eaa:ijaeqs:v:1:y2004:i:1_6 Ordering information: This journal article can be ordered from Access Statistics for this article More articles in International Journal of Applied Econometrics and Quantitative Studies from Euro-American Association of Economic Development |
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