Export-Led Growth or Growth-Driven Export? New Evidence from Granger Causality Analysis on OECD Countries

Abstract

This paper investigates the possibility of export-led growth and growth-driven export by testing for Granger causality between the logarithms of real exports and real GDP in twenty-five OECD countries. Two complementary testing strategies are applied. First, depending on the time series properties of the data, causality is tested with Wald tests within finite-order vector autoregressive (VAR) models in levels and/or in first-differences. Then, with no need for pre-testing, a modified Wald procedure is used in augmented level VAR systems. In both cases we experiment with alternative deterministic trend degrees. The results indicate that there is no causality between exports and growth (NC) in..