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Capital and Trade As Engines of Growth in France: An Application of Johansen's Cointegration Methodology

Author

Listed:
  • Mr. David T. Coe
  • Mr. Reza Moghadam

Abstract

An aggregate production function is estimated with recent cointegrating techniques that are particularly appropriate for estimating long-run relationships. The empirical results suggest that the growth of output in France has been spurred by increased trade integration within the European Community and by the accumulation not only of business sector capital—the only measure of capital included in most empirical studies—but also by the accumulation of government infrastructure capital, residential capital, and R&D capital. Calculations of potential output indicate that trade and capital—broadly defined—account for all of the growth in the French economy during the last two decades.

Suggested Citation

  • Mr. David T. Coe & Mr. Reza Moghadam, 1993. "Capital and Trade As Engines of Growth in France: An Application of Johansen's Cointegration Methodology," IMF Working Papers 1993/011, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1993/011
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    Keywords

    WP; capital; estimate; production function; vector; likelihood ratio test; EC variable; integrating vector; R&D capital; EC trade integration variable; EC integration; Potential output; Production growth; Corporate sector; Stocks; Eastern Europe; East Asia; Southeast Asia; Asia and Pacific;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • F15 - International Economics - - Trade - - - Economic Integration
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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