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Issue 5(1), October 2010 -- Paper Abstracts

Girard  (p. 9-22)

Cooper (p. 23-32)

Kunz-Osborne (p. 33-41)

Coulmas-Law (p.42-46)

Stasio (p. 47-56)

Albert-Valette-Florence (p.57-63)

Zhang-Rauch (p. 64-70)

Alam-Yasin (p. 71-78)

Mattare-Monahan-Shah (p. 79-94)

Nonis-Hudson-Hunt (p. 95-106)

JOURNAL OF APPLIED BUSINESS AND ECONOMICS

Balance of Payment Constrained Growth: Johansen versus Autoregressive

Distributed Lag Model (ARDL) Test for Co-integration

Author(s): Rexford Abaidoo

Citation: Rexford Abaidoo, (2011) "Balance of Payment Constrained Growth: Johansen versus Autoregressive Distributed Lag Model (ARDL) Test for Co-integration," Journal of Applied Business and Economics, Vol. 12, Iss. 2, pp. 49 - 60

Article Type: Research paper

Publisher: North American Business Press

Abstract:

This study empirically examines the long-run relationship between growth in GDP and growth in export

in an attempt to verify the balance of payment constrained growth model or the Thirlwall’s law in the

case of an emerging economy in Sub-Sahara Africa; Ghana1. This study for the first time employs both

the Johansen test for co-integration as well as the Autoregressive distributed lag model (ARDL) (the

Bounds test), in its attempt at verifying this long run relationship. Existing studies show that these two

statistical methods provide an ideal platform in testing for the presence of Thirlwall’s law, and have been

used independently. However, whether the two methods could arrive at similar conclusion in a single test

is yet to be explored. This study explores this likelihood in addition to verifying the presence of

Thirlwall’s law in the sub-region. Data used in this study span the period 1965 to 2004. Result from the

Johansen’s approach to co-integration shows that Ghana’s GDP growth and growth in exports are

cointegrated; which supports Thirlwall’s law or a balance of payment constrained growth economy. The

outcome in the case of the autoregressive distributed lag model test for co-integration was however

inconclusive.