A Dynamic Analysis of the Impact of Uncertainty on Import- and/or Export-Led Growth: The Experience of Japan and the Asian Tigers

Posted: 28 Apr 2012  

Renuka Mahadevan

University of Queensland - School of Economics

Sandy Suardi

University of Wollongong

Date Written: August 1, 2007

Abstract

Increasing integration of the Asian Tigers with the world economy through trade has exposed their income and trade to greater uncertainty and volatility. This paper models uncertainty in trade and income and re-examines the stability of the trade-growth nexus for Japan and the Asian Tigers in a dynamic framework. We find that in a volatile environment Japan's GDP growth is only import-led while Hong Kong's GDP growth is both export and import growth-led. On the other hand, incorporating uncertainty breaks the causal link between Korea's GDP growth and trade but it does not affect Taiwan's mutually causative relationship between GDP growth, with exports and imports. Lastly, the varied qualitative and quantitative impact of volatility in imports and exports on income growth among the Asian Tigers provides further thought for policy making.

Suggested Citation

Mahadevan, Renuka and Suardi, Sandy, A Dynamic Analysis of the Impact of Uncertainty on Import- and/or Export-Led Growth: The Experience of Japan and the Asian Tigers (August 1, 2007). Japan and the World Economy, Vol. 20, No. 2, 2008. Available at SSRN: https://ssrn.com/abstract=2046091

Renuka Mahadevan

University of Queensland - School of Economics ( email )

Brisbane, QLD 4072
Australia

Sandy Suardi (Contact Author)

University of Wollongong ( email )

Northfields Avenue
Wollongong, New South Wales 2522
Australia

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