Causality analysis between exports, imports and economic growth of Pakistan

Authors

  • Syyeda Farhana Shah
  • Saleem Khan Assistant Professor in Economics, Department of Economics, Abdul Wali Khan University Mardan, Garden Campus
  • Abdur Rauf

DOI:

https://doi.org/10.34260/jaebs.115

Keywords:

Imports, Exports, Economic Growth, Causality

Abstract

The objective of study is to identify causal relationships among the variables such as exports, imports and Gross Domestic Product (GDP) in case of Pakistan. The study uses time series data for the period from 1981-2016. Stationarity is checked with the Augmented Dickey Fullers' (ADF) test, and the Engle Grange approach is utilized to determine the long run relationship among variables of the study. Moreover, causality among the selected variables is tested by using the Vector Error Correction Model (VECM). We found that the causality runs from GDP to imports and exports. Furthermore, no causal relation is found from exports to GDP and from imports to GDP, but the causality goes from GDP to these two variables. The causality from GDP to exports and imports are positive and significant. Finally, the results indicate that the causal relationship between GDP and imports is stronger than the GDP and exports.

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Author Biographies

Syyeda Farhana Shah

MS Scholar, Islamia College Peshawar

Abdur Rauf

Assistant Professor, Department of Economics, Abbottabad University of Science and Technology (AUST)

Article

Published

2017-12-30

How to Cite

Shah, S. F. ., Khan, S., & Rauf, A. . (2017). Causality analysis between exports, imports and economic growth of Pakistan. Journal of Applied Economics and Business Studies, 1(1), 45-52. https://doi.org/10.34260/jaebs.115