Summary
This paper examines the cyclical relationship between exports and output in the U.K. using structural time-series modelling. The time series on exports and output over the period 1885–1993 are decomposed, and the cyclical components are extracted. Causality testing as applied to the cyclical components reveals the absence of causality from exports to output except in the post-1945 period. The results of causality testing are confirmed by the results of estimating a structural time-series model in which exports appear as an explanatory state variable. Three different explanations are suggested for the change in this relationship during the most recent period.
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I would like to thank an anonymous referee for some useful comments. I am also grateful to Keshav Vishwakarma for his comments and to Lee Smith for her inquisitive reading of the paper
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Moosa, I.A. The cyclical relationship between exports and output in the U.K.: 1885–1993. De Economist 144, 635–647 (1996). https://doi.org/10.1007/BF01371943
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DOI: https://doi.org/10.1007/BF01371943