Thisstudy investigates causal relationship between net-export and GDP, using the neo-classical trade theory as framework for the study in order to understand gross domestic product (dependent variable)Long-Term Relati...
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Thisstudy investigates causal relationship between net-export and GDP, using the neo-classical trade theory as framework for the study in order to understand gross domestic product (dependent variable)Long-Term Relationship with its explanatory variablesnet-export in goods and services, gross capital formation, and labor,We employ a panel of18 high income countries and 17 low incomecountries for a period that spans from 1990to 2014. We consider the long-termcausalrelationship that may exist between the explanatory variables used. The empirical analysis is divided in two parts in this study. In the first part, the panel unit root tests and stationary tests revealed that all variables have a unit root; in first differences, they arestationary, these variables are integrated of order 1 or I (1) and the level of the variables are I (1). In the second part, the different co-integration tests conducted between the dependent variable and the explanatory variables result in the confirmation of the fact that they are co-integrated. In the third part, an estimation of the long-run relationship is carried out with Panel Error Correction Modeling (ECM) usinggrouped mean and Pooled Mean Group Regression *** Hausman test was used to determine the best estimator among the *** PMG was found to be the best estimator in this study net-export and GDPare positively correlated with all the independent variables of the model. All estimated coefficients are positive and significant at5% level of significance.
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