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2016•Unpublished venueRequires access

Exports and Imports Cointegration: Further Evidence from the ECOWAS

Olumuyiwa Olamade, Oluwasola Oni

Open publisher page 4 citations

Abstract

This paper investigates the long-run relationship between exports and imports in 13 ECOWAS (Economic Community of West African States) countries during 1970-2015. Evidence points to cointegration of exports and imports in eight of the countries using the bounds testing approach to cointegration. The sign and significance of the error correction term estimates reinforce our evidence of cointegration. Estimates of long-run coefficient based on ARDL and two other long-run estimators; Fully Modified OLS (FMOLS), and the Dynamic OLS (DOLS) showed that Benin, Cape Verde, Cote d’Ivoire, Mali, and Nigeria satisfies the sufficient condition for sustainability of their current accounts over the long-run. Finally, CUSUM and CUSUMSQ tests confirmed the stability of the estimated parameters. However, structural breaks in the relationship between exports and imports exist in Benin.

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What this paper is about

This paper investigates the long-run relationship between exports and imports in 13 ECOWAS (Economic Community of West African States) countries during 1970-2015. Evidence points to cointegration of exports and imports in eight of the countries using the bounds testing approach to cointegration. The sign and significance of the error correction term estimates reinforce our evidence of cointegration. Estimates of long-run coefficient based on ARDL and two other long-run estimators; Fully Modified OLS (FMOLS), and the Dynamic OLS (DOLS) showed that Benin, Cape Verde, Cote d’Ivoire, Mali, and Nigeria satisfies the sufficient condition for sustainability of their current accounts over the long-run. Finally, CUSUM and CUSUMSQ tests confirmed the stability of the estimated parameters. However, structural breaks in the relationship between exports and imports exist in Benin.

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Available abstract

This paper investigates the long-run relationship between exports and imports in 13 ECOWAS (Economic Community of West African States) countries during 1970-2015. Evidence points to cointegration of exports and imports in eight of the countries using the bounds testing approach to cointegration. The sign and significance of the error correction term estimates reinforce our evidence of cointegration. Estimates of long-run coefficient based on ARDL and two other long-run estimators; Fully Modified OLS (FMOLS), and the Dynamic OLS (DOLS) showed that Benin, Cape Verde, Cote d’Ivoire, Mali, and Nigeria satisfies the sufficient condition for sustainability of their current accounts over the long-run. Finally, CUSUM and CUSUMSQ tests confirmed the stability of the estimated parameters. However, structural breaks in the relationship between exports and imports exist in Benin.

Key concepts: Cointegration, Economics, Estimator, Cape verde, Econometrics, Short run, Ordinary least squares, Macroeconomics

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