EconPapers    
Economics at your fingertips  
 

Causality between exports and economic growth in South Africa: evidence from linear and nonlinear tests

Ahdi Noomen Ajmi, Goodness C. Aye, Mehmet Balcilar and Rangan Gupta ()
Additional contact information
Goodness C. Aye: University of Pretoria, South Africa

Journal of Developing Areas, 2015, vol. 49, issue 2, 163-181

Abstract: This paper investigates the dynamic causal link between exports and economic growth using both linear and nonlinear Granger causality tests. We use annual South African data on real exports and real gross domestic product from 1911-2011. The linear Granger causality result shows no evidence of significant causality between exports and GDP. The relevant VAR is unstable, which undermines our confidence in the causality result identified by the linear Granger causality test. Accordingly we turn to the nonlinear methods to evaluate Granger causality between exports and GDP. First, we use Hiemstra and Jones (1994) nonlinear Granger causality test and find a unidirectional causality from GDP to exports. However, using a more powerful and less biased nonlinear test, the Diks and Panchenko (2006) test, we find evidence of significant bi-directional causality. These results highlight the risk of misleading conclusions based on the standard linear Granger causality tests which neither accounts for structural breaks nor uncover nonlinearities in the dynamic relationship between exports and GDP.

Keywords: Exports; Economic growth; causality; linear; nonlinear (search for similar items in EconPapers)
JEL-codes: C14 C32 F43 O40 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed

Downloads: (external link)
http://muse.jhu.edu/journals/journal_of_developing_areas/v049/49.2.ajmi.html

Related works:
Working Paper: Causality between Exports and Economic Growth in South Africa: Evidence from Linear and Nonlinear Tests (2013)
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:jda:journl:vol.49:year:2015:issue2:pp:163-181

Access Statistics for this article

More articles in Journal of Developing Areas from Tennessee State University, College of Business Contact information at EDIRC.
Bibliographic data for series maintained by Abu N.M. Wahid ().

 
Page updated 2019-07-21
Handle: RePEc:jda:journl:vol.49:year:2015:issue2:pp:163-181