Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/288474 
Year of Publication: 
2020
Citation: 
[Journal:] International Economics and Economic Policy [ISSN:] 1612-4812 [Volume:] 17 [Issue:] 4 [Publisher:] Springer [Place:] Berlin, Heidelberg [Year:] 2020 [Pages:] 923-944
Publisher: 
Springer, Berlin, Heidelberg
Abstract: 
This paper reconsiders the classic relationship between trade and economic development. We examine the short-term and long-run dynamics between trade and income for 167 countries over the period 1970–2011 and assume that the effect is not homogenous for all countries but rather varies according to the development stage and the degree of trade openness. We apply panel cointegration, Granger causality and panel error correction in combination with Dynamic Ordinary Least Squares and General Method of Moments estimation to explore the causal relationship between these two variables. The results suggest a statistically significant positive short-run and long-run global relationship between trade and income. However, when splitting the panel into different income and trade openness groups, a long-run relationship is observed only for high-income countries and countries with a relatively high degree of trade openness.
Subjects: 
Trade
Openness
Development
Panel cointegration
Causality
Error correction
JEL: 
F10
F15
F43
O10
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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