Impact of Trade Openness on Output Growth: Co integration and Error Correction Model Approach

Authors

  • Asma Arif University of Wah
  • Hasnat Ahmad Curtin University

Abstract

This study analyzed the long run relationship between trade openness and output growth for Pakistan using annual time series data for 1972-2010. This study follows the Engle and Granger co integration analysis and error correction approach to analyze the long run relationship between the two variables. The Error Correction Term (ECT) for output growth and trade openness is significant at 5% level of significance and indicates a positive long run relation between the variables. This study has also analyzed the causality between trade openness and output growth by using granger causality test. The results of granger causality show that there is a bi-directional significant relationship between trade openness and economic growth. 

Keywords: Trade openness; output growth; cointegration; error correction model

JEL Classifications: F00; F1

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Author Biography

Asma Arif, University of Wah

Economics and Lecturer

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Published

2012-09-03

How to Cite

Arif, A., & Ahmad, H. (2012). Impact of Trade Openness on Output Growth: Co integration and Error Correction Model Approach. International Journal of Economics and Financial Issues, 2(4), 379–385. Retrieved from https://www.econjournals.com/index.php/ijefi/article/view/277

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