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Bilateral trade and economic growth : The empirical evidence between U.S. and South Korea

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Frame of Image nrelated Regression (SUR) models under the static model assumption, an Impulse Response Function (IRF) and Forecast Error Variation Decomposition (FEVD) under the Vector Autoregressive (VAR) model, and Granger causality tests. Empirical results indicate a causal relationship between bilateral export growth and economic growth for the U.S. and Korean economies. The export-led growth (ELG) hypothesis is strongly supported by the results of Granger causality tests on Korean exports.
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Ph.D. Candidate and Research Assistant, Department of Agricultural Economics and Agribusiness, Louisiana State University, LA, U.S. Crescent City Tigers Alumni Professor, Department of Agricultural Economics and Agribusiness, Louisiana State University, LA, U.S.
60 Journal of Rural Development 32(2)
I. Introduction
The relationship between export and economic growth has been the subject of considerable interest in recent years (Feder, 1982). According to the export-led growth (ELG) hypothesis, export activity leads economic growth. That is, exports directly affect the production of goods and services for nations. Another approach to export and economic growth is the growth-driven export (GDE) hypothesis which postulates a reverse relationship and hypothesizes that economic growth itself induces trade flow (Konya, 2006). There is a vast amount of empirical literature on this issue. Almost all of these previous papers are concerned with the relation between total exports and economic growth in dev


Full Text
Title Bilateral trade and economic growth
Similar Titles
Sub Title

The empirical evidence between U.S. and South Korea

Material Type Reports
Author(English)

Kang, Hyunsoo; Kennedy, P. Lynn

Publisher

Korea Rural Economic Institute

Date 2009
Journal Title; Vol./Issue Journal of Rural Development:32/2
Pages 30
Subject Country United States(Americas)
South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Trade
Government and Law < International Politics

Abstract

This paper analyzes the relationships between bilateral trade and economic growth in the U.S. and Korean economies. Using quarterly data from 1990 to 2008, the theoretical procedures utilize Ordinary Least Square (OLS) and Seemingly Unrelated Regression (SUR) models under the static model assumption, an Impulse Response Function (IRF) and Forecast Error Variation Decomposition (FEVD) under the Vector Autoregressive (VAR) model, and Granger casualty tests. Empirical results indicate a casual relationship between bilateral export growth and economic growth for the U.S. and Korean economies. The export-led growth (ELG) hypothesis is strongly supported by the results of Granger casualty tests on Korean exports.