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The Economics and Finance Letters

December 2020, Volume 7, 2, pp 92-103

Export- Led Growth Hypothesis for Ghana: A TVAR & TVECM Analysis

Shuffield Seyram Asafo

Shuffield Seyram Asafo 1


  1. PhD Candidate, University of Macerata, Department of Economics and Law, Italy. 1

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on PubMed

Pages: 92-103

DOI: 10.18488/journal.29.2020.72.92.103

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Article History:

Received: 15 April, 2020
Revised: 19 May, 2020
Accepted: 23 June, 2020
Published: 27 July, 2020


Abstract:

This study employs threshold models to examine the export-led growth hypothesis (ELG) for Ghana from 1970-2018. The analysis commences as follows. Firstly, using real GDP as threshold variable, the study conducts a non-linearity test for the threshold vector autoregressive (TVAR) model as against the linear vector autoregressive (VAR) model. Secondly, the study evaluates whether the ELG hypothesis is best explained with linear co-integration models or threshold co-integration models. The empirical results indicate that, the ELG hypothesis is supported by the two-threshold vector autoregressive model (threshold values of 2.35 and 2.46) and a two-threshold vector error correction model (threshold values -0.50 and -0.20). The error correction term of the TVECM is negative and statistically different from zero, signifying speed of long run convergence. In terms of threshold co-integration, real GDP versus real exports and real GDP vs real imports are threshold co-integrated. In contrast, the null hypothesis of linear co-integration is not rejected for real export versus real import.
Contribution/ Originality
This study uses new estimation methodology to evaluate the export – output growth nexus for Ghana for the period spanning from 1970-2018.

Keywords:

Macroeconomic data, Exports , Non-linear time series models Ghana, Unit root test, Co-integration.

Reference:


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Funding:

This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

Competing Interests:

Acknowledgement:

The author declares that there are no conflicts of interests regarding the publication of this paper.

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