Causal Nexus Between Export, External Debt and Economic Growth: The Case of Ethiopia
No Thumbnail Available
Date
2018-11
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
This study aimed to investigate the causal nexus between Export, External debt and Growth
using the annual data from 1985-2016 in the case of Ethiopia. The study applied the Auto
Regressive Distributed Lag (ARDL) Approach to investigate the short run and long run
dynamics of the variables whereas the Granger causality approach is used to study the nature and
direction of causality between the variables. The bounds F–test for cointegration test yields
evidence of a long-run relationship among the variables. The Granger Causality test result
revealed that there is no evidence of Granger causal relationship between export and growth
implying neither export led growth nor growth driven export is valid in the context of Ethiopia.
On the other result, the study found that there is a uni directional Granger causality from external
debt service to growth while there is no Granger causality between external debt stock and
economic growth in both directions. Finally, our result showed that there is a bi directional
Granger causality relation between investment and export implying that export and capital
formation Granger cause to each other.
Description
Keywords
Causality, Cointegration analysis, Economic growth