Are imports driven by exports or the other way around ?Thailand evidence

Sharabati, Yamen and Masih, Mansur (2017): Are imports driven by exports or the other way around ?Thailand evidence.

Abstract

This paper investigates the long run and causal relationship between exports and imports. In addition to the main variables, we include two other macroeconomic variables (exchange rate and money supply) in order to use them as control variables. Thailand is taken as a case study. The standard time series techniques are used for the analysis. The results tend to indicate that there is a long-run theoretical relationship between the variables as evidenced in their being cointegrated. The findings based on variance decompositions analysis suggest that imports are driven by exchange rate and followed by exports. In other words, imports tend to lead exports in the context of Thailand. The findings have strong policy implications for developing countries like Thailand.

• Item Type: MPRA Paper
• Language: English
• Keywords: Lead-lag, Exports, Imports, VECM, VDC, Thailand
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C58 - Financial Econometrics; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy; G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets

References

Arize, Augustine C.(2002), Imports and Exports in 50 Countries Test of Cointegration and Structural Breaks, International Review of Economics and Finance, 11, 101-115

Bahmani-Oskooee, M., and H.J. Rhee, (1997), Are Imports and Exports of Korea Cointegrated? International Economic Journal, 11, 109-114.

Fountas, S. and Wu, J.L.(1999), Are the US Current Account deficits really Sustainable?, International Economic Journal, 13, 28-51

Hussain, M. A.(2014), Economic Growth, exports and imports in Pakistan: Granger causality analysis,Journal of Business in Developing Nations, 13, 31 -38.

Husted, S. (1992), The Emerging U.S. Current Account Deficit in the 1980s: A Cointegration Analysis, Review of Economics and Statistics, 74(1), 159-166.

Johansen, S. (1991), Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models, Econometrica, 59(6), 1551-1580

Marin, D. (1992). Is the export-led growth hypothesis valid for industrialised countries? Review of Economics and Statistics, 74(4), 678-688.

Masih, M. Al-Sahlawi, M. and De Mello, L. (2010), What drives carbon-dioxide emissions: Income or electricity generation? Evidence from Saudi Arabia, Journal of Energy and Development, 33(2), 201 – 213

Pesaran, M.H. and Shin, Y. (2002). Long Run Structural Modeling. Econometric Reviews, 21(1), 49-87.

Shan, J. and Tian, G. G. (1998). Causality between exports and economic growth: The empirical evidence from Shanghai. Australian Economic Papers, 37(2), 195-202.

Sun, E. and Shun, J. (1999), Export-led growth and the US economy: Another look, Applied Economic Letters, 3, 341-344.