Trade openness and economic growth in Botswana: Evidence from cointegration and error-correction modelling

Figures & data

Figure 1. Trends in trade openness and economic growth in Botswana (1960–2014).

Table 1. Unit root test results

Dickey–Fuller general least square (DF-GLS)
Dickey–Fuller GLS					Phillip-Perron				Perron (1997)
Variable	Stationarity of all variables in levels		Stationarity of all variables in first difference		Stationarity of all variables in levels		Stationarity of all variables in first difference		Stationarity of all variables in levels		Stationarity of all variables in first difference
	No trend	Trend	No trend	Trend	No trend	Trend	No trend	Trend	No trend	Trend	No trend	Trend
GROWTH	−4.651***	−5.405***	–	–	−4.596***	−5.391***	–	–	−6.573***	−6.426***	–	–
OPEN1	−1.443	−2.389	−5.228***	−5.330***	−1.415	−2.645	−6.259***	−6.167***	−4.553**	−4.350	–	−6.438***
OPEN2	−2.024	−2.444	−5.466***	−6.061***	−2.510	−2.979	−6.378***	−6.306***	−3.580	−3.330	−7.307***	−7.353***
OPEN3	−1.253	−1.831	−5.385***	−4.733***	−1.619	−1.925	−4.676***	−4.591***	−1.985	−3.692	−6.128***	−6.035***
OPEN4	−2.428	−2.493	−4.771***	−5.776***	−2.492	−2.639	−6.699***	−8.133***	−3.603	−3.973	−6.824***	−6.732***
INV/GDP	−2.293	−2.401	−4.318***	−4.646***	−2.614*	−2.613	–	−4.629***	−5.177***	−6.634***	–	–
GOV/GDP	−1.269	−1.652	−4.515***	−5.296***	−4.596***	−5.391***	–	–	−3.231	−3.281	−6.622***	−6.688***
INFL	−2.473**	−3.926***	–	–	−1.415	−2.645	−6.259***	−6.167***	−3.851	4.539	−9.129***	−8.632***
M2/GDP	−1.212	−2.369	−1.667*	−5.055***	−2.510	−2.979	−6.378***	−6.306***	−6.573***	−6.426***	–	–

Source: Author’s own calculations. Note: *, ** and *** denote statistical significance at 10%, 5% and 1% levels respectively.

Table 2. Results for the ARDL bounds test

Equation	Dependent variable			Function			F-statistic
Equation (1)(1) $GROWTH={ }_0+{\beta }_{1}OPENPROXY+{\beta }_2\frac{INV}{GDP}+{\beta }_3\frac{GOV}{GDP}+{\beta }_{4}INFL+{\beta }_5\frac{M2}{GDP}+{\epsilon }_t$(1)	GROWTH			F(GROWTH│OPEN1, INV/GDP, GOV/GDP, INFL, M2/GDP)			3.366*
Equation (2)(2) $\begin{array}{rl}& \mathrm{\Delta }GROWTH={\alpha }_0+\sum _{i=1}^n{\beta }_{1i}\mathrm{\Delta }GROWT{H}_{t-i}+\sum _{i=0}^n{\beta }_{2i}\mathrm{\Delta }OPENPROX{Y}_{t-i}\\ & +\sum _{i=0}^n{\beta }_{3i}\mathrm{\Delta }{\frac{INV}{GDP}}_{t-i}+\sum _{i=0}^n{\beta }_{4i}\mathrm{\Delta }{\frac{GOV}{GDP}}_{t-i}+\sum _{i=0}^n{\beta }_{5i}\mathrm{\Delta }INF{L}_{t-i}+\sum _{i=o}^n{\beta }_{6i}\mathrm{\Delta }{\frac{M2}{GDP}}_{t-i}\\ & +{\lambda }_{1}GROWT{H}_{t-1}+{\lambda }_{2}OPE{N}_{t-1}+{\lambda }_3{\frac{INV}{GDP}}_{t-1}+{\lambda }_4{\frac{GOV}{GDP}}_{t-1}\\ & +{\lambda }_{5}IN{F}_{t-1}+{\lambda }_6{\frac{M2}{GDP}}_{t-1}+u_t\end{array}$(2)	GROWTH			F(GROWTH│OPEN2, INV/GDP, GOV/GDP, INFL, M2/GDP)			5.111**
Equation (3)(3) $\begin{array}{rl}& \mathrm{\Delta }GROWT{H}_t={\alpha }_0+\sum _{i=1}^n{\alpha }_{1i}\mathrm{\Delta }GROWT{H}_{t-i}+\sum _{i=1}^n{\alpha }_{2i}\mathrm{\Delta }OPENPROX{Y}_{t-i}\\ & +\sum _{i=}^n{\alpha }_{3i}\mathrm{\Delta }INV/GD{P}_{t-i}+\sum _{i=1}^n{\alpha }_{4i}\mathrm{\Delta }GOV/GD{P}_{t-i}+\sum _{i=1}^n{\alpha }_{5i}\mathrm{\Delta }INF{L}_{t-i}\\ & +\sum _{i=1}^n{a}_{6i}\mathrm{\Delta }M2/GD{P}_{t-i}+\phi EC{T}_{t-1}+{\mu }_t\end{array}$(3)	GROWTH			F(GROWTH│OPEN3, INV/GDP, GOV/GDP, INFL, M2/GDP)			5.022**
Equation (4)	GROWTH			F(GROWTH│OPEN4, INV/GDP, GOV/GDP, INFL, M2/GDP)			4.133**
Asymptotic critical values
Pesaran et al. (2001), p. 300, Table CI(iii) Case III	1%		5%			10%
	I(0)	I(1)	I(0)		I(1)	I(0)	I(1)
	3.41	4.68	2.62		3.79	2.26	3.35

Source: Author’s own calculations. Note: *, ** and *** denote statistical significance at 10%, 5% and 1% levels respectively.

Table 3. Results of the long- and short-run estimations of the ARDL

Panel 1: Long-run coefficients, dependent variable: GROWTH
	Equation 1(1) $GROWTH={ }_0+{\beta }_{1}OPENPROXY+{\beta }_2\frac{INV}{GDP}+{\beta }_3\frac{GOV}{GDP}+{\beta }_{4}INFL+{\beta }_5\frac{M2}{GDP}+{\epsilon }_t$(1)		Equation 2(2) $\begin{array}{rl}& \mathrm{\Delta }GROWTH={\alpha }_0+\sum _{i=1}^n{\beta }_{1i}\mathrm{\Delta }GROWT{H}_{t-i}+\sum _{i=0}^n{\beta }_{2i}\mathrm{\Delta }OPENPROX{Y}_{t-i}\\ & +\sum _{i=0}^n{\beta }_{3i}\mathrm{\Delta }{\frac{INV}{GDP}}_{t-i}+\sum _{i=0}^n{\beta }_{4i}\mathrm{\Delta }{\frac{GOV}{GDP}}_{t-i}+\sum _{i=0}^n{\beta }_{5i}\mathrm{\Delta }INF{L}_{t-i}+\sum _{i=o}^n{\beta }_{6i}\mathrm{\Delta }{\frac{M2}{GDP}}_{t-i}\\ & +{\lambda }_{1}GROWT{H}_{t-1}+{\lambda }_{2}OPE{N}_{t-1}+{\lambda }_3{\frac{INV}{GDP}}_{t-1}+{\lambda }_4{\frac{GOV}{GDP}}_{t-1}\\ & +{\lambda }_{5}IN{F}_{t-1}+{\lambda }_6{\frac{M2}{GDP}}_{t-1}+u_t\end{array}$(2)		Equation 3(3) $\begin{array}{rl}& \mathrm{\Delta }GROWT{H}_t={\alpha }_0+\sum _{i=1}^n{\alpha }_{1i}\mathrm{\Delta }GROWT{H}_{t-i}+\sum _{i=1}^n{\alpha }_{2i}\mathrm{\Delta }OPENPROX{Y}_{t-i}\\ & +\sum _{i=}^n{\alpha }_{3i}\mathrm{\Delta }INV/GD{P}_{t-i}+\sum _{i=1}^n{\alpha }_{4i}\mathrm{\Delta }GOV/GD{P}_{t-i}+\sum _{i=1}^n{\alpha }_{5i}\mathrm{\Delta }INF{L}_{t-i}\\ & +\sum _{i=1}^n{a}_{6i}\mathrm{\Delta }M2/GD{P}_{t-i}+\phi EC{T}_{t-1}+{\mu }_t\end{array}$(3)		Equation 4
Regressor	Coefficient	Probability	Coefficient	Probability	Coefficient	Probability	Coefficient	Probability
OPENPROXY	0.170*** (2.891)	0.008	0.439*** (4.777)	0.000	0.078 (0.856)	0.400	0.240** (2.674)	0.013
INV/GDP	0.100 (0.541)	0.593	0.367** (3.160)	0.005	−0.332 (−1.048)	0.305	0.045 (0.223)	0.825
GOV/GDP	−0.155 (−0.529)	0.601	0.020 (0.079)	0.937	−0.682** (−2.216)	0.036	−0.269 (−0.917)	0.368
INFL	−0.096 (−0.213)	0.833	0.389 (1.612)	0.117	−0.237 (−0.466)	0.645	0.116 (0.250)	0.805
M2/GDP	−0.082 (−0.658)	0.516	0.096 (0.945)	0.352	−0.309** (−2.617)	0.015	−0.177 (−1.614)	0.119
C	−8.459 (−0.466)	0.645	−37.418** (−2.234)	0.022	38.485*** (2.989)	0.006	13.744 (0.962)	0.345
Panel 2: Short-run coefficients, dependent variable: ΔGROWTH
	Equation 1(1) $GROWTH={ }_0+{\beta }_{1}OPENPROXY+{\beta }_2\frac{INV}{GDP}+{\beta }_3\frac{GOV}{GDP}+{\beta }_{4}INFL+{\beta }_5\frac{M2}{GDP}+{\epsilon }_t$(1)		Equation 2(2) $\begin{array}{rl}& \mathrm{\Delta }GROWTH={\alpha }_0+\sum _{i=1}^n{\beta }_{1i}\mathrm{\Delta }GROWT{H}_{t-i}+\sum _{i=0}^n{\beta }_{2i}\mathrm{\Delta }OPENPROX{Y}_{t-i}\\ & +\sum _{i=0}^n{\beta }_{3i}\mathrm{\Delta }{\frac{INV}{GDP}}_{t-i}+\sum _{i=0}^n{\beta }_{4i}\mathrm{\Delta }{\frac{GOV}{GDP}}_{t-i}+\sum _{i=0}^n{\beta }_{5i}\mathrm{\Delta }INF{L}_{t-i}+\sum _{i=o}^n{\beta }_{6i}\mathrm{\Delta }{\frac{M2}{GDP}}_{t-i}\\ & +{\lambda }_{1}GROWT{H}_{t-1}+{\lambda }_{2}OPE{N}_{t-1}+{\lambda }_3{\frac{INV}{GDP}}_{t-1}+{\lambda }_4{\frac{GOV}{GDP}}_{t-1}\\ & +{\lambda }_{5}IN{F}_{t-1}+{\lambda }_6{\frac{M2}{GDP}}_{t-1}+u_t\end{array}$(2)		Equation 3(3) $\begin{array}{rl}& \mathrm{\Delta }GROWT{H}_t={\alpha }_0+\sum _{i=1}^n{\alpha }_{1i}\mathrm{\Delta }GROWT{H}_{t-i}+\sum _{i=1}^n{\alpha }_{2i}\mathrm{\Delta }OPENPROX{Y}_{t-i}\\ & +\sum _{i=}^n{\alpha }_{3i}\mathrm{\Delta }INV/GD{P}_{t-i}+\sum _{i=1}^n{\alpha }_{4i}\mathrm{\Delta }GOV/GD{P}_{t-i}+\sum _{i=1}^n{\alpha }_{5i}\mathrm{\Delta }INF{L}_{t-i}\\ & +\sum _{i=1}^n{a}_{6i}\mathrm{\Delta }M2/GD{P}_{t-i}+\phi EC{T}_{t-1}+{\mu }_t\end{array}$(3)		Equation 4
Regressor	Coefficient	Probability	Coefficient	Probability	Coefficient	Probability	Coefficient	Probability
ΔGROWTH(−1)	…	…	0.439*** (4.777)	0.000	…	…	…	…
ΔOPENPROXY	0.407*** (4.177)	0.000	0.367** (3.160)	0.005	0.072 (0.851)	0.402	0.409*** (4.499)	0.000
ΔOPEN(−1)	−0.052 (−0.433)	0.668	…	…	…	…	−0.070 (−0.725)	0.474
ΔINV/GDP	0.313 (1.183)	0.246	0.346** (2.514)	0.017	0.135 (0.369)	0.715	0.256 (0.952)	0.349
ΔINV/GDP(−1)	…	…	…	…	0.455 (1.520)	0.140	…	…
ΔGOV/GDP	−1.275*** (−3.192)	0.003	−0.548* (−1.860)	0.072	−0.630** (−2.007)	0.054	−1.340*** (−3.436)	0.002
ΔGOV/GDP(−1)	0.578 (1.137)	0.265	…	…		…	0.733 (1.550)	0.133
ΔINFL	0.507* (1.826)	0.078	0.366* (1.718)	0.095	0.013 (0.047)	0.962	0.670** (2.459)	0.020
ΔINFL(−1)	…	…	…	…	−0.341 (−0.800)	0.431	…	…
ΔINFL(−2)	…	…	…	…	0.507 (1.441)	0.161	…	…
ΔM2/GDP	−0.081 (−0.659)	0.515	0.090 (1.056)	0.299	−0.404** (−2.468)	0.020	−0.158 (−1.499)	0.144
ECT(−1)	−0.985*** (−4.832)	0.000	−0.941*** (−4.045)	0.000	−0.924*** (−4.811)	0.000	−0.893*** (−4.247)	0.000
Test statistic R-squared R-bar squared S.E. F-statistic[Prob] DW	Equation 1(1) $GROWTH={ }_0+{\beta }_{1}OPENPROXY+{\beta }_2\frac{INV}{GDP}+{\beta }_3\frac{GOV}{GDP}+{\beta }_{4}INFL+{\beta }_5\frac{M2}{GDP}+{\epsilon }_t$(1) 0.752 0.638 3.045 9.879[0.000] 1.983		Equation 2(2) $\begin{array}{rl}& \mathrm{\Delta }GROWTH={\alpha }_0+\sum _{i=1}^n{\beta }_{1i}\mathrm{\Delta }GROWT{H}_{t-i}+\sum _{i=0}^n{\beta }_{2i}\mathrm{\Delta }OPENPROX{Y}_{t-i}\\ & +\sum _{i=0}^n{\beta }_{3i}\mathrm{\Delta }{\frac{INV}{GDP}}_{t-i}+\sum _{i=0}^n{\beta }_{4i}\mathrm{\Delta }{\frac{GOV}{GDP}}_{t-i}+\sum _{i=0}^n{\beta }_{5i}\mathrm{\Delta }INF{L}_{t-i}+\sum _{i=o}^n{\beta }_{6i}\mathrm{\Delta }{\frac{M2}{GDP}}_{t-i}\\ & +{\lambda }_{1}GROWT{H}_{t-1}+{\lambda }_{2}OPE{N}_{t-1}+{\lambda }_3{\frac{INV}{GDP}}_{t-1}+{\lambda }_4{\frac{GOV}{GDP}}_{t-1}\\ & +{\lambda }_{5}IN{F}_{t-1}+{\lambda }_6{\frac{M2}{GDP}}_{t-1}+u_t\end{array}$(2) 0.670 0.582 2.555 10.150[0.000] 1.571		Equation 3(3) $\begin{array}{rl}& \mathrm{\Delta }GROWT{H}_t={\alpha }_0+\sum _{i=1}^n{\alpha }_{1i}\mathrm{\Delta }GROWT{H}_{t-i}+\sum _{i=1}^n{\alpha }_{2i}\mathrm{\Delta }OPENPROX{Y}_{t-i}\\ & +\sum _{i=}^n{\alpha }_{3i}\mathrm{\Delta }INV/GD{P}_{t-i}+\sum _{i=1}^n{\alpha }_{4i}\mathrm{\Delta }GOV/GD{P}_{t-i}+\sum _{i=1}^n{\alpha }_{5i}\mathrm{\Delta }INF{L}_{t-i}\\ & +\sum _{i=1}^n{a}_{6i}\mathrm{\Delta }M2/GD{P}_{t-i}+\phi EC{T}_{t-1}+{\mu }_t\end{array}$(3) 0.675 0.519 3.551 5.7661[0.000] 2.034		Equation 4 0.755 0.641 3.032 9.994[0.000] 1.983

Source: Author’s own calculations. Note: *, ** and *** denote statistical significance at 10%, 5% and 1% levels respectively. T-ratios are in parentheses ()

Table 4. Summary of the chow breakpoint test results

Breakpoint test statistic	1984	Probability	1998	Probability
F-statistic	0.347	0.906	2.289*	0.064
Log likelihood ratio	2.870	0.825	15.962**	0.014
Wald statistic	2.083	0.912	13.731**	0.033

Source: Author’s own calculations: *, ** denote statistical significance at 10% and 5% respectively.

Table 5. Results of the long- and short-run estimations of the ARDL with trade policy dummy

Panel 1: Long-run coefficients, dependent variable: GROWTH
	Equation 1(1) $GROWTH={ }_0+{\beta }_{1}OPENPROXY+{\beta }_2\frac{INV}{GDP}+{\beta }_3\frac{GOV}{GDP}+{\beta }_{4}INFL+{\beta }_5\frac{M2}{GDP}+{\epsilon }_t$(1)		Equation 2(2) $\begin{array}{rl}& \mathrm{\Delta }GROWTH={\alpha }_0+\sum _{i=1}^n{\beta }_{1i}\mathrm{\Delta }GROWT{H}_{t-i}+\sum _{i=0}^n{\beta }_{2i}\mathrm{\Delta }OPENPROX{Y}_{t-i}\\ & +\sum _{i=0}^n{\beta }_{3i}\mathrm{\Delta }{\frac{INV}{GDP}}_{t-i}+\sum _{i=0}^n{\beta }_{4i}\mathrm{\Delta }{\frac{GOV}{GDP}}_{t-i}+\sum _{i=0}^n{\beta }_{5i}\mathrm{\Delta }INF{L}_{t-i}+\sum _{i=o}^n{\beta }_{6i}\mathrm{\Delta }{\frac{M2}{GDP}}_{t-i}\\ & +{\lambda }_{1}GROWT{H}_{t-1}+{\lambda }_{2}OPE{N}_{t-1}+{\lambda }_3{\frac{INV}{GDP}}_{t-1}+{\lambda }_4{\frac{GOV}{GDP}}_{t-1}\\ & +{\lambda }_{5}IN{F}_{t-1}+{\lambda }_6{\frac{M2}{GDP}}_{t-1}+u_t\end{array}$(2)		Equation 3(3) $\begin{array}{rl}& \mathrm{\Delta }GROWT{H}_t={\alpha }_0+\sum _{i=1}^n{\alpha }_{1i}\mathrm{\Delta }GROWT{H}_{t-i}+\sum _{i=1}^n{\alpha }_{2i}\mathrm{\Delta }OPENPROX{Y}_{t-i}\\ & +\sum _{i=}^n{\alpha }_{3i}\mathrm{\Delta }INV/GD{P}_{t-i}+\sum _{i=1}^n{\alpha }_{4i}\mathrm{\Delta }GOV/GD{P}_{t-i}+\sum _{i=1}^n{\alpha }_{5i}\mathrm{\Delta }INF{L}_{t-i}\\ & +\sum _{i=1}^n{a}_{6i}\mathrm{\Delta }M2/GD{P}_{t-i}+\phi EC{T}_{t-1}+{\mu }_t\end{array}$(3)		Equation 4
Regressor	Coefficient	Probability	Coefficient	Probability	Coefficient	Probability	Coefficient	Probability
OPENPROXY	0.346*** (3.146)	0.005	0.609*** (5.734)	0.000	0.211 (1.013)	0.320	0.386** (3.724)	0.001
INV/GDP	0.148 (0.427)	0.674	0.914*** (4.121)	0.000	0.180 (0.493)	0.626	0.059 (0.177)	0.862
GOV/GDP	−0.061** (−2.285)	0.032	−1.261*** (4.010)	0.001	−0.935* (−1.736)	0.094	−1.062 (−2.514)	0.020
INFL	0.261 (0.766)	0.452	0.445* (1.912)	0.068	0.031 (0.090)	0.923	0.386 (1.243)	0.228
M2/GDP	−0.123 (−0.689)	0.499	−1.171 (1.378)	0.181	−0.011 (−0.066)	0.948	−0.227 (−1.377)	0.183
DUM_TRADE	−1.124 (−0.367)	0.717	5.106 (2.053)	0.051	−6.300** (−2.195)	0.037	−1.656 (−0.599)	0.556
C	6.662 (0.310)	0.760	−26.717** (−2.329)	0.029	10.265 (0.830)	0.414	18.759 (1.232)	0.231
Panel 2: Short-run coefficients, dependent variable: ΔGROWTH
	Equation 1(1) $GROWTH={ }_0+{\beta }_{1}OPENPROXY+{\beta }_2\frac{INV}{GDP}+{\beta }_3\frac{GOV}{GDP}+{\beta }_{4}INFL+{\beta }_5\frac{M2}{GDP}+{\epsilon }_t$(1)		Equation 2(2) $\begin{array}{rl}& \mathrm{\Delta }GROWTH={\alpha }_0+\sum _{i=1}^n{\beta }_{1i}\mathrm{\Delta }GROWT{H}_{t-i}+\sum _{i=0}^n{\beta }_{2i}\mathrm{\Delta }OPENPROX{Y}_{t-i}\\ & +\sum _{i=0}^n{\beta }_{3i}\mathrm{\Delta }{\frac{INV}{GDP}}_{t-i}+\sum _{i=0}^n{\beta }_{4i}\mathrm{\Delta }{\frac{GOV}{GDP}}_{t-i}+\sum _{i=0}^n{\beta }_{5i}\mathrm{\Delta }INF{L}_{t-i}+\sum _{i=o}^n{\beta }_{6i}\mathrm{\Delta }{\frac{M2}{GDP}}_{t-i}\\ & +{\lambda }_{1}GROWT{H}_{t-1}+{\lambda }_{2}OPE{N}_{t-1}+{\lambda }_3{\frac{INV}{GDP}}_{t-1}+{\lambda }_4{\frac{GOV}{GDP}}_{t-1}\\ & +{\lambda }_{5}IN{F}_{t-1}+{\lambda }_6{\frac{M2}{GDP}}_{t-1}+u_t\end{array}$(2)		Equation 3(3) $\begin{array}{rl}& \mathrm{\Delta }GROWT{H}_t={\alpha }_0+\sum _{i=1}^n{\alpha }_{1i}\mathrm{\Delta }GROWT{H}_{t-i}+\sum _{i=1}^n{\alpha }_{2i}\mathrm{\Delta }OPENPROX{Y}_{t-i}\\ & +\sum _{i=}^n{\alpha }_{3i}\mathrm{\Delta }INV/GD{P}_{t-i}+\sum _{i=1}^n{\alpha }_{4i}\mathrm{\Delta }GOV/GD{P}_{t-i}+\sum _{i=1}^n{\alpha }_{5i}\mathrm{\Delta }INF{L}_{t-i}\\ & +\sum _{i=1}^n{a}_{6i}\mathrm{\Delta }M2/GD{P}_{t-i}+\phi EC{T}_{t-1}+{\mu }_t\end{array}$(3)		Equation 4
Regressor	Coefficient	Probability	Coefficient	Probability	Coefficient	Probability	Coefficient	Probability
ΔGROWTH(−1)	−0.060 (−0.264)	0.794	0.018 (0.076)	0.940	0.022 (0.119)	0.906	0.229 (1.140)	2.678
ΔOPENPROXY	0.454*** (3.821)	0.001	0.454*** (3.278)	0.004	0.172 (0.842)	0.408	0.398*** (4.886)	0.000
ΔOPEN(−1)	−0.234 (−1.380)	0.182	−0.028 (−0.177)	0.861	−0.379 (−1.607)	0.121	−0.125 (−1.052)	0.306
ΔINV/GDP	0.179 (0.586)	0.564	0.708 ** (2.572)	0.017	0.087 (0.247)	0.807	0.203 (0.806)	0.430
ΔINV/GDP(−1)	0.100 (0.363)	0.720	0.022 (0.077)	0.939	0.508 (1.531)	0.138	0.094 (0.353)	0.728
ΔGOV/GDP	−1.167** (−2.551)	0.018	−0.982* (−2.576)	0.017	−0.803 (−1.477)	0.152	−1.295*** (−3.601)	0.001
ΔGOV/GDP(−1)	1.321** (2.581)	0.017	0.194 (0.467)	0.645	0.642 (1.156)	0.259	0.411 (0.983)	0.338
ΔINFL	0.252 (0.716)	0.481	0.304 (1.106)	0.281	−0.071 (0.217)	0.830	0.364 (1.298)	0.209
ΔINFL(−1)	−0.667 (−1.672)	0.109	−0.062 (−0.207)	0.838	−0.413 (−1.242)	0.226	−0.052 (−0.159)	0.875
ΔINFL(−2)	…	…	0.740** (2.616)	0.016	…	…	0.549 (2.084)	0.050
ΔM2/GDP	−0.006 (−0.038)	0.970	−0.175 (−1.375)	0.183	0.025 (0.187)	0.853	−0.209 (−1.574)	0.131
DUM_TRADE	−0.057 (−0.041)	0.968	−0.302 (−0.258)	0.799	−0.250 (−0.159)	0.875	−0.763 (0.604)	0.552
ECT(−1)	−0.844** (−2.633)	0.015	−0.625* (−1.172)	0.099	−0.994*** (−3.651)	0.001	−0.994*** (−3.775)	0.001
Test statistic R-squared R-bar squared S. E. F-statistic[Prob] DW	Equation 1(1) $GROWTH={ }_0+{\beta }_{1}OPENPROXY+{\beta }_2\frac{INV}{GDP}+{\beta }_3\frac{GOV}{GDP}+{\beta }_{4}INFL+{\beta }_5\frac{M2}{GDP}+{\epsilon }_t$(1) 0.737 0.558 3.405 4.109[0.001] 1.822		Equation 2(2) $\begin{array}{rl}& \mathrm{\Delta }GROWTH={\alpha }_0+\sum _{i=1}^n{\beta }_{1i}\mathrm{\Delta }GROWT{H}_{t-i}+\sum _{i=0}^n{\beta }_{2i}\mathrm{\Delta }OPENPROX{Y}_{t-i}\\ & +\sum _{i=0}^n{\beta }_{3i}\mathrm{\Delta }{\frac{INV}{GDP}}_{t-i}+\sum _{i=0}^n{\beta }_{4i}\mathrm{\Delta }{\frac{GOV}{GDP}}_{t-i}+\sum _{i=0}^n{\beta }_{5i}\mathrm{\Delta }INF{L}_{t-i}+\sum _{i=o}^n{\beta }_{6i}\mathrm{\Delta }{\frac{M2}{GDP}}_{t-i}\\ & +{\lambda }_{1}GROWT{H}_{t-1}+{\lambda }_{2}OPE{N}_{t-1}+{\lambda }_3{\frac{INV}{GDP}}_{t-1}+{\lambda }_4{\frac{GOV}{GDP}}_{t-1}\\ & +{\lambda }_{5}IN{F}_{t-1}+{\lambda }_6{\frac{M2}{GDP}}_{t-1}+u_t\end{array}$(2) 0.796 0.657 2.998 5.724[0.000] 2.457		Equation 3(3) $\begin{array}{rl}& \mathrm{\Delta }GROWT{H}_t={\alpha }_0+\sum _{i=1}^n{\alpha }_{1i}\mathrm{\Delta }GROWT{H}_{t-i}+\sum _{i=1}^n{\alpha }_{2i}\mathrm{\Delta }OPENPROX{Y}_{t-i}\\ & +\sum _{i=}^n{\alpha }_{3i}\mathrm{\Delta }INV/GD{P}_{t-i}+\sum _{i=1}^n{\alpha }_{4i}\mathrm{\Delta }GOV/GD{P}_{t-i}+\sum _{i=1}^n{\alpha }_{5i}\mathrm{\Delta }INF{L}_{t-i}\\ & +\sum _{i=1}^n{a}_{6i}\mathrm{\Delta }M2/GD{P}_{t-i}+\phi EC{T}_{t-1}+{\mu }_t\end{array}$(3) 0.643 0.458 3.727 3.469[0.004] 2.011		Equation 4 0.842 0.708 2.767 6.272[0.000] 2.213

Source: Author’s own calculations. Note: *, ** and *** denote statistical significance at 10%, 5% and 1% levels respectively. T-ratios are in parentheses ().

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