Exports, imports, and economic growth in Portugal: evidence from causalityand cointegration analysis

This paper investigates the Gran ger-causality between exports, imports, an d economic growth in Portugal over the period 1865-1998. The role of the im port variable in the investigation of exports-output causality is emphasize d, enabling one to test for the cases direct causality, indirect causality, and spurious causality between export growth and output growth. The empiri cal results do not confirm a unidirectional causality between the variables considered. There is a feedback effect between exports-output growth and i mports-output growth. More interestingly, there is no kind of significant c ausality between import-export growth. Both results seem to support the con clusion that the growth of output for the Portuguese economy during that pe riod revealed a shape associated with a small dual economy in which the int ra-industry transactions were very limited. (C) 2001 Elsevier Science BN. A ll rights reserved.