Devanthran, Haritharan (2009): Interdependence of SAARC-7 countries: an empirical study of business cycles.
Download (165kB) | Preview
This research intends to study on the interdependence of South Asia Association of Regional Co-operation (SAARC-7) relationship. It consists of seven countries which include Sri Lanka, Pakistan, Nepal, Maldives, India, Bhutan and Bangladesh. This study utilizes yearly real GDP data that spans from 1970 to 2007 from the SAARC-7 countries. Three methods are used to determine the interdependence of SAARC-7 countries namely the correlation coefficient estimation method, the standard Dickey-Fuller (ADF) unit root test and the Granger non-causality test proposed by Toda and Yamamoto (1995). Empirical results show that there are mutual relationship and correlation among the real GDP growth between SAARC-7 countries in the long run. Results obtained from the Toda and Yamamoto Granger non-causality test indicate that there is a sturdy interdependence among the economies of SAARC-7 countries.
|Item Type:||MPRA Paper|
|Original Title:||Interdependence of SAARC-7 countries: an empirical study of business cycles|
|Keywords:||Economy Integration, Business Cycles, SAARC-7|
|Subjects:||F - International Economics > F1 - Trade > F15 - Economic Integration
E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations; Cycles
|Depositing User:||haritharan Devanthran|
|Date Deposited:||15. Aug 2011 03:31|
|Last Modified:||13. Feb 2013 07:49|
Anam, M., & Rahman, S. S. (1991). Economic integration in South Asia: An exploratory analysis in trade, investment and finance. Journal of Developing Societies, 7, 139-158.
Camacho, M., Perez-Quiros, G., & Saiz, L. (2006). Are European business cycles close enough to be just one? Journal of Economic Dynamics & Control, 30, 1698-1706.
Caporale, G. M., Katsimi, M., & Pittis, N. (2002). Causality links between consumer and producer prices: Empirical evidence. South Economic Journal, 68(3), 703-711.
Dickey, D. A., & Fuller, W. A. (1979). Distributions of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 74, 427- 431.
Doyle, E. (2001). Export output causality and the role of exports in Irish growth: 1950-1997. International Economic Journal, 15(3), 31-54.
Gujarati, D. N. (1995). Basic econometrics (3rd Ed.). New York: McGraw-Hill.
Hamori, S. (2002). The transmission mechanism of business cycles among Germany, Japan,the United Kingdom and the United State of America. Applied Economics, 32, 405- 410.
Hassan, M. K. (2001). Is SAARC a viable economic block? Evidence from Gravity model. Journal of Asian Economics, 12, 263-290.
Inklaar, R., Jong-A-Pin, R., & De Haan, J. (2007). Trade and business cycle synchronization in OECD countries:A re- examination. European Economic Review (forthcoming.
Jain, S. C. (1999). Prospects for a South Asian free trade agreement: Problems and challenges. International Business Review, 8, 399-419.
Khan, S. M. & Khan Z. S. (2003). Asian Economic Integration: A Perspective on South Asia, Journal of Asian Economics, 13,767-785.
Masih, A. M. M., & Masih, R. (1996). Empirical test to discuss the dynamic causal chain in macroeconomic activity: New evidence from Thailand and Malaysia based on multivariate cointegration vector error-correction modeling approach. Journal of Policy Modelling, 15(5), 531-560.
Mastromarco, C., & Woitek, U. (2007). Regional business cycles in Italy: Computational Statistics & Data Analysis.
Rajapakse, P. & Arunatilake, N. (1997). Would a Reduction in Trade Barriers Promote Intra-SAARC Trade? A Sri Lankan Perspective, Journal of Asian Economics, 8(1), 95-115.
Saxena, S. C. (2005). Can South Asia adopt a common currency? Journal of Asian Economics, 16, 635-662.
Shan, J., & Sun, F. (1998). Domestic saving and foreign investment in Australia: A Granger causality test. International Economic Journal, 12(4), 79-87.
Toda, H. Y., & Yamamoto, T. (1995). Statistical inference in vector autoregressions with possible near-integrated processes. Journal of Econometrics, 66, 225-250.