Zahra' Fannoun and Islam Hassouneh

DOI: https://doi.org/10.6000/1929-7092.2019.08.22

Published: 12 March 2019  

Abstract: The relationship between exports, imports and economic growth is investigated for the Palestinian economy over the period 2000-2018, using quarterly data. To do so, cointegration test using Johansen's approach as well as vector error correction technique are used. Findings confirm the presence of long-run equilibrium relationship between exports, imports and output growth. Results also support the existence of bidirectional long-run causality between exports, imports and output growth. As for the short-run causality, findings support both the export-led import and the import-led export hypotheses. Further, imports are found to Granger cause economic growth. Policy makers should be aware of the importance of trade to stimulate economic growth.

Keywords: Exports, imports, economic growth, cointegration, VECM.

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