Working Paper: CEPR ID: DP362
Authors: Dalia Marin
Abstract: The comovement between exports and productivity observed in many countries suggests a direct link between these two variables. This paper tries to establish whether such a causal link exists for four developed market economies, using co-integration and Granger-causality techniques. These techniques offer a means to overcome serious problems encountered in previous attempts to examine this relationship, while recent trade theory suggests that the relationship between trade and productivity is fundamentally ambiguous. Both reasons call for more empirical evidence. The findings of the econometric analysis suggest that exports, productivity and the terms of trade move together in the long run in all countries except the United Kingdom.
Keywords: trade; growth; cointegration; granger causality
JEL Codes: 410; 110; 610
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| exports (F10) | productivity (O49) |
| terms of trade (F14) | productivity (O49) |
| exports (F10) | productivity (US) (O47) |
| exports (F10) | productivity (Japan) (O49) |
| exports (F10) | productivity (Germany) (E23) |
| terms of trade (F14) | productivity (US) (O47) |
| terms of trade (F14) | productivity (UK) (E23) |