The relationship between the international trade and economic growth accounting for model uncertainty and reverse causality

Czyżewski, Daniel (2021): The relationship between the international trade and economic growth accounting for model uncertainty and reverse causality.

Abstract

This paper addresses issues connected with economic growth, how the theory on it has changed and also what its potential determinants are. In order to do so, the panel data was constructed for 129 countries with the time period of 1975-2015. In addition to this, the paper also accounts for the model uncertainty as well as reverse causality issues that may arise while dealing with such data. The methodology applied in the research consists of the Moral-Benito (2016) framework combined with the bayesian model averaging method (BMA). Out of the five variables, only one turned out to be fragile. The other four appeared to be robust with three of them at the most restrictive level. What is more, the paper also presents the potential reasoning behind obtained results and upholds the hypothesis that international trade has a positive impact on the economic growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: economic growth, bayesian model averaging, trade openesss, dynamic panels, weakly exogenous regressors
• Subjects: F - International Economics > F1 - Trade; F - International Economics > F1 - Trade > F19 - Other; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O49 - Other

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