TY - JOUR
T1 - Trade, growth and growth volatility
T2 - New panel evidence
AU - Kim, Dong Hyeon
AU - Lin, Shu Chin
AU - Suen, Yu Bo
N1 - Funding Information:
The third author gratefully acknowledges the financial support of National Science Council through grant NSC102-2410-H-156-004 . The usual disclaimer applies.
Publisher Copyright:
© 2016
Copyright:
Copyright 2016 Elsevier B.V., All rights reserved.
PY - 2016/9/1
Y1 - 2016/9/1
N2 - This paper examines the relationships of trade with economic growth and growth volatility using the Chudik and Pesaran (2013) cross-sectionally augmented autoregressive distributed lag (CS-ARDL) panel data approach to account for the potential dynamic heterogeneity and cross-section dependency in the effects of trade. Some important results emerge. First, greater international trade, on average, promotes economic growth and amplifies growth volatility in the long run, and hence induces a positive long-run association between growth and growth volatility. Second, greater international trade stimulates economic activities and mitigates economic fluctuations, on average, in the short run, and therefore causes a negative short-run correlation between growth and growth volatility. And third, there is large heterogeneity in the effects of trade, depending upon a country's development level, financial system, macroeconomic policies, human capital, corruption, and labor regulation.
AB - This paper examines the relationships of trade with economic growth and growth volatility using the Chudik and Pesaran (2013) cross-sectionally augmented autoregressive distributed lag (CS-ARDL) panel data approach to account for the potential dynamic heterogeneity and cross-section dependency in the effects of trade. Some important results emerge. First, greater international trade, on average, promotes economic growth and amplifies growth volatility in the long run, and hence induces a positive long-run association between growth and growth volatility. Second, greater international trade stimulates economic activities and mitigates economic fluctuations, on average, in the short run, and therefore causes a negative short-run correlation between growth and growth volatility. And third, there is large heterogeneity in the effects of trade, depending upon a country's development level, financial system, macroeconomic policies, human capital, corruption, and labor regulation.
KW - Economic growth
KW - Growth volatility
KW - Heterogeneous panel
KW - Trade openness
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U2 - 10.1016/j.iref.2016.07.006
DO - 10.1016/j.iref.2016.07.006
M3 - Article
AN - SCOPUS:84978245732
SN - 1059-0560
VL - 45
SP - 384
EP - 399
JO - International Review of Economics and Finance
JF - International Review of Economics and Finance
ER -
