Trade balances and the terms of trade in g-7 countries: Penal cointegration approach

• HAMORI, Shigeyuki ^[1]
  1. [1] Kobe University

     Kobe University

     Chuo-ku, Japón

     
• Localización: Applied econometrics and international development, ISSN 1578-4487, Vol. 8, Nº. 2, 2008, págs. 13-22
• Idioma: inglés
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• Resumen

  • This paper empirically analyzes the long-run equilibrium between trade balances and the terms of trade using the nonstationary panel data analysis. Empirical results indicate that trade balances and the terms of trade do not have cointegrating relation for G-7 countries. This implies that the deterioration in the terms of trade will not necessarily improve a country's trade balance in the long-run.