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The aggregate exports-GDP relation under the prism of infrequent trend breaks and multi-horizon causality

Ioanna Konstantakopoulou ()
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Ioanna Konstantakopoulou: Centre of Planning and Economic Research

International Economics and Economic Policy, 2017, vol. 14, issue 4, 661-689

Abstract: Abstract This paper re-examines the relationship between exports and economic growth in OECD countries. We apply the multi-horizon causality method developed by Dufour et al. (J Econ 132(2):337–362, 2006) for the first time, taking into account the possibility of infrequent structural trend breaks. Econometric techniques that avoid the circular problem when testing for segmented trends and unit roots have been employed along with a hybrid estimator of break location. The empirical evidence indicates that there is a unidirectional causal relationship from exports to economic growth for Finland, Germany, and the United States in the short run horizon, and directly in the cases of Austria and Ireland. We verify a direct causal relation from economic growth to real exports in France, Luxembourg and Portugal in various continuous horizons. Bidirectional causal relations between exports and economic growth were detected in Greece and Norway.

Keywords: Export-led growth hypothesis; Structural change; Trend break; Unit roots; Multi-horizon causality (search for similar items in EconPapers)
JEL-codes: F1 F43 O1 (search for similar items in EconPapers)
Date: 2017
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