Do Exports lead Economic Output in Five Asian Countries? A Cointegration and Granger Causality Analysis

Jiayi Huang and Miguel Ramirez

Business and Economic Research, 2016, vol. 6, issue 2, 30-50

Abstract: This paper examines the relationship between exports and economic output for five major Asian economies using annual data in an expanded data set and employing unit root and cointegration analysis. It employs a Vector Error Correction Model (VECM) that treats all variables in the modified production function as potentially endogenous and then determines via weak exogeneity tests whether some of the key variables can be treated as exogenous (omitted from the system). Johansen cointegration tests find a positive long-run relationship between exports and economic output for the Philippines, Singapore, and Thailand. Cointegration tests find a negative long-run relationship between exports and economic output for India. The Block Granger causality tests and impulse response functions for the Philippines and Singapore find stronger causality from exports to economic output rather than the reverse. Granger causality tests in level form also find significant causality from exports to economic output. No causality exists between exports and economic output in the case of India. Exports seem to promote economic growth in three of the four countries that have cointegrated data, which supports the exports-led growth hypothesis found in some of the extant literature. The paper does not find cointegration for China because the variables are integrated of different orders from I(0) to I(2).

Keywords: Block Granger Causality Test; Export-led Growth Hypothesis; Johansen Cointegration Test; Modified Production Function; Pantula Procedure; Phillips-Perron Test; Vector Error Correction Model (VECM); Zivot-Andrews single-break unit root test. (search for similar items in EconPapers)
JEL-codes: C22 F14 F53 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.macrothink.org/journal/index.php/ber/article/view/9747/7911 (application/pdf)
http://www.macrothink.org/journal/index.php/ber/article/view/9747 (text/html)

Related works:
Working Paper: Do Exports lead Economic Output in Five Asian Countries? A Cointegration and Granger Causality Analysis (2016)
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:mth:ber888:v:6:y:2016:i:2:p:30-50

Access Statistics for this article

Business and Economic Research is currently edited by Daisy Young

More articles in Business and Economic Research from Macrothink Institute
Bibliographic data for series maintained by Technical Support Office ( this e-mail address is bad, please contact ).