The Causal Relationship between Exports, Imports and Economic Growth in Palestine

Authors

  • Zahra' Fannoun College of Business Administration, Hebron University, P.O. Box 40, Hebron
  • Islam Hassouneh College of Administrative Science and Informatics, Palestine Polytechnic University (PPU), P.O. Box 198, Abu Ruman, Hebron

DOI:

https://doi.org/10.6000/1929-7092.2019.08.22

Keywords:

Exports, imports, economic growth, cointegration, VECM.

Abstract

The relationship between exports, imports and economic growth is investigated for the Palestinian economy over the period 2000-2018, using quarterly data. To do so, cointegration test using Johansen's approach as well as vector error correction technique are used. Findings confirm the presence of long-run equilibrium relationship between exports, imports and output growth. Results also support the existence of bidirectional long-run causality between exports, imports and output growth. As for the short-run causality, findings support both the export-led import and the import-led export hypotheses. Further, imports are found to Granger cause economic growth. Policy makers should be aware of the importance of trade to stimulate economic growth.

Downloads

Published

2019-03-12

Issue

Section

Articles