The export-led growth hypothesis: The role of the exchange rate, money, and government expenditure from Korea

The export-led growth hypothesis for Korea is examined in five-variable vector autoregressive and vector error correction models from 1973:1 to 1994:4. Results of the vector autoregressive models indicate economic growth and Granger-causing export growth, regardless of the sample period. However, re...

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Bibliographic Details
Published in:Atlantic economic journal 1999-09, Vol.27 (3), p.260-272
Main Authors: Glasure, Yong, Lee, Aie-Rie
Format: Article
Language:English
Subjects:
Causality
Economic growth
Economic models
Error correction & detection
Expenditures
Exports
Foreign exchange rates
Government spending
Hypotheses
Regression analysis
Studies
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Summary:The export-led growth hypothesis for Korea is examined in five-variable vector autoregressive and vector error correction models from 1973:1 to 1994:4. Results of the vector autoregressive models indicate economic growth and Granger-causing export growth, regardless of the sample period. However, results of the vector error correction models show bi-directional causality between export growth and economic growth when the multivariate generalization of the Granger causality tests are used. In the variance decompositions, the real exchange rate contains most information regarding future fluctuations in economic growth and export growth followed by money supply and government expenditure in the subsample and the full sample, with economic growth as a dependent variable. However, when the dependent variable is export growth, then the order of the magnitude in the full sample becomes the exchange rate, followed by economic growth, government spending, and money supply.
ISSN:0197-4254
1573-9678
DOI:10.1007/BF02299577