New evidence on export expansion, economic growth and causality in China

Abstract

This paper extends the work by Mah (2005) on the causality between export expansion and economic growth in China by adding imports as additional variable in a trivariate framework. Interestingly, this paper has empirically found no long-run relationships among exports, real Gross Domestic Product, and imports. This paper further shows no long- and short-run causality, at least in Granger's sense, between export expansion and economic growth in China, but economic growth does Granger-cause imports in the short run.

Notes

¹ Data in quarterly basis are not available for a sufficient long sample period (see also Tang, 2003).

² This paper does not detail the methodology of the Phillips–Perron unit root test, the ARDL (bounds test), ECM, or Johansen's multivariate approaches since these are well-documented and widely applied in the empirical literature; see Tang (2005).

³ The results are not reported here due to space limitations, but available from the author upon request.

⁴ The critical value is from Pesaran et al . (2001, Table CI(iii) Case III unrestricted intercept and no trend, k = 2, regressors).

⁵ The critical value is based on Banerjee et al . (1998, Table 1, k = 2 regressors, and T = 25 sample size).

⁶ Two lags of VAR is included as suggested by AIC and SC from 1, 2, and 3 lags. The trace- and max-statistics fail to reject the null hypothesis of none cointegrating relationships using 0.1 level critical values. The two set of test specifications are (1) linear data trend and test of no trend; and (2) linear data trend and test of trend. The results are available from author upon request.