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Trade Openness and Economic Growth in Canada: An Evidence from Time-Series Tests

Author

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  • Tarlok Singh

    (Department of Accounting, Finance and Economics, Griffith Business School, Griffith University, Nathan Campus, 170 Kessels Road, Brisbane, Queensland-4111, Australia)

Abstract

This study examines the effects of international trade and investment on output and tests the null hypothesis of Granger non-causality among trade, investment and economic growth in Canada. The long-run model is estimated using several single-equation and system estimators to assess the robustness of results across methodologies. The single-equation, OLSEG, GMM, DOLS, NLLS and FMOLS, estimates of the model provide consistent support for the positive and significant long-run effects of exports and investment on output. The ML system estimates cross-validate the cointegrating relationship and reinforce the positive effects of exports and investment and the negative effects of imports on output. The over-parameterized level-VAR estimates suggest unidirectional Granger-causality from exports, imports and investment each to output. The estimates of the model with structural breaks support the long-run relationship, though the evidence is not unambiguous ubiquitously across all the tests. The evidence supporting the positive and significant long-run effects overwhelms the evidence providing weak or no support for the effects of trade on output. The results underline the need for the acceleration of exports (and investment) to offset the demand-reducing effects of imports and escalate the altitudes of output and economic growth.

Suggested Citation

  • Tarlok Singh, 2015. "Trade Openness and Economic Growth in Canada: An Evidence from Time-Series Tests," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 15(3), pages 361-407, September.
    • Handle: RePEc:wsi:gejxxx:v:15:y:2015:i:03:n:gej-2014-0009
    DOI: 10.1515/GEJ-2014-0009
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    Cited by:

    1. Efayena, Obukohwo Oba & Olele, Hilda Enoh, 2020. "A Validation of the Phillips Curve Hypothesis in Nigeria: A Quarterly Data-Based Approach," MPRA Paper 98804, University Library of Munich, Germany.
    2. Nurudeen Abu & Awadh Ahmed Mohammed Gamal & Musa Abdullahi Sakanko & Ana Mateen & David Joseph & Ben-Obi Onyewuchi Amaechi, 2021. "How have COVID-19 Confirmed Cases and Deaths Affected Stock Markets? Evidence from Nigeria," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 15(1), February.
    3. Nurudeen Abu, 2019. "Inflation and Unemployment Trade-off: A Re-examination of the Phillips Curve and its Stability in Nigeria," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 13(1), March.
    4. Nurudeen Abu & Awadh Ahmed Mohammed Gamal, 2020. "An Empirical Investigation of the Twin Deficits Hypothesis in Nigeria: Evidence from Cointegration Techniques," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 14(3), September.
    5. Piotr Bartkiewicz, 2020. "Quantitative Easing: New Normal or Emergency Measure?," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 14(3), September.

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