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Export and Income Growth in Japan and Taiwan
Author(s) -
Xu Zhenhui
Publication year - 1998
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00099
Subject(s) - economics , unit root , causality (physics) , scrutiny , growth theory , unit (ring theory) , lag , empirical research , econometrics , granger causality , macroeconomics , neoclassical economics , mathematics , computer network , statistics , physics , mathematics education , quantum mechanics , political science , computer science , law
Economic theory suggests that export growth promotes economic growth. Yet empirical research has not found clear support for the export‐led growth hypothesis, even for the newly industrialized economies where the theory should be most applicable. This paper provides an explanation for the apparent discrepancy between the theory and the empirical results. It shows that causality inferences on the export‐led growth hypothesis are sensitive to unit roots or near‐unit roots in the time series and to the lag structure chosen for causality tests. Therefore, the issues of unit root and lag structure deserve scrutiny in empirical research.