Trade and regional growth in Spain: panel cointegration in a small sample

Laurin, Frédéric
(2012) Applied Economics — Vol. 44, n° 4, p. 435-447 (2012)

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  • Laurin, FrédéricUCLouvain
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Abstract
In this article, we test for the existence of a relationship between per capita Gross Domestic Product (GDP) and trade, for 15 Spanish Autonomous Communities between 1988 and 2004, using a panel cointegration methodology. In particular, we implement several panel unit root tests (Maddala and Wu, 1999; Levin et al., 2002; Im et al., 2003) and panel cointegration tests (Pedroni, 1999, 2004), with a special attention to their behaviour in a small sample. We also develop a Seemingly Unrelated Regression Estimation (SURE) residual based test, in order to explicitly take into account the cross regional correlation pattern. Appropriate confidence intervals are estimated with a sieve bootstrap designed for our small time sample, preserving the dependence structure among cross sectional units. Our cointegration tests reject the existence of a significant relationship between GDP per capita and exports. However, we do find some evidence of a significant relationship between GDP per capita and imports or with total trade. © 2011 Copyright Taylor and Francis Group, LLC.
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Laurin, F. (2012). Trade and regional growth in Spain: panel cointegration in a small sample. Applied Economics, 44(4), 435-447. https://doi.org/10.1080/00036846.2010.508728 (Original work published 2012)