Imports and economic growth in Africa: Testing for granger causality in the frequency domain

Olufemi Adewale Aluko and Patrick Olufemi Adeyeye

The Journal of International Trade & Economic Development, 2020, vol. 29, issue 7, 850-864

Abstract: In this paper, we test for causality between imports and economic growth in 41 African countries. We differ from earlier studies by testing for causality at high and low frequency levels, that is, in the short and long run, respectively. In doing so, we employ a frequency domain Granger causality test robust to pretest biases relating to unit root and cointegration tests. We document that there is: (i) unidirectional causality running from imports and economic growth in 7 countries in the short run and 5 countries in the long run, (ii) unidirectional causality running from economic growth to imports in 4 countries in the short run and 10 countries in the long run, (iii) bidirectional causality in only one country in the short run and 3 countries in the long run, and (iv) no causality in 29 countries in the short run and 23 countries in the long run. Our findings suggest that, for the most part, the neutrality hypothesis is valid in the short- and long-run periods. We imply from our findings that possible changes in the causality dynamics between imports and economic growth over time should be taken into consideration before designing policies.

Date: 2020
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Citations: View citations in EconPapers (9)

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DOI: 10.1080/09638199.2020.1751870

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