National Autonomous University of Mexico

TRADE AND WORLD

ECONOMIC GROWTH,
1970-2015
Eduardo Lora

Project Link, NY City. October 22-24, 2014

A. MOTIVATION
1. EVALUATE ECONOMIC GROWTH FOR
SEVERAL COUNTRIES IN THE LONG RUN.
WE ARE LIVING A SLOW PACE.
2. DEMONSTRATE THAT INTERNATIONAL
TRADE IS NOT THE MAIN FUEL OF
ECONOMIC GROWTH.

11/04/2015

B. CONTENTS
Economic Growth.
Some Countries and Regions.
Long run analysis.
International
Trade
and
Economic Growth.
Econometric Issues.
3

METHODOLOGICAL ISSUES
HP Filter with the end-of-sample correction (St.-Amant &
Van Norden, 1997).
Questionable, criticism
Well known filter

min

=1
=1

+1 1
=1

end-of-sample correction

ECONOMIC GROWTH,
SOME COUNTRIES
1970-2015

Statistical Sources:
WORLD BANK (2014)
http://databank.bancomundial.org/data/views/rep
orts/tableview.aspx#. September, 2014
IMF (2014) WORLD ECONOMIC OUTLOOK :
LEGACIES, CLOUDS, UNCERTAINTIES / Overview of
the World Economic Outlook Projections
http://www.imf.org/external/pubs/ft/weo/2014/02/
pdf/text.pdf , October, 2014.
WTO (2014):
http://www.wto.org/english/news_e/pres14_e/pr7
22_e.htm, October, 2014.
11/04/2015

Germany
6
2014 (1.6)
4 1971 (3.4)
1990 (2.8)
2

-2

-4

-6
1970

1975

1980

1985

1990
GDP

1995

2000

2005

2010

2015

POTENTIAL

Latin America
10
8

2007 (3.6)

6 1970(7.6)
4
2

2014 (3.1)
1987 (2.0)

0
-2
-4
1970

1975

1980

1985

1990
GDP

1995

2000

2005

2010

2015

POTENTIAL

Brazil
15.0
12.5 1970 (11.7)
10.0

2007 (3.6)

2014 (2.4)

7.5
1991 (1.9)
5.0
2.5
0.0
-2.5
-5.0
1970

1975

1980

1985

1990
GDP

1995

2000

2005

2010

2015

POTENTIAL

Chile
15
1992 (7.5)
1973 (1.2)
10

2014 (4.1)

-5

-10

-15
1970

1975

1980

1985

1990
GDP

1995

2000

2005

2010

2015

POTENTIAL
10

China
20

1970 (13.1)

16

12

2006 (10.5)
2014 (7.7)

1977 (6.7)

-4
1970

1975

1980

1985

1990
PIB

Fuente: Banco Mundial (2014)

Pronsticos : FMI (2014)

1995

2000

2005

2010

2015

Potencial

11

United States
8
1970 (2.5)
6
2014 (2.1)

1997 (3.5)
4

2009 (1.5)
2

-2

-4
1970

1975

1980

1985

1990
GDP

1995

2000

2005

2010

2015

POTENTIAL
12

Japan
10

1970 (3.3)
2014 (1.2)

8
1985 (4.5)
6

2009 (0.6)

4
2
0
-2
-4
-6
1970

1975

1980

1985

1990
GDP

1995

2000

2005

2010

2015

POTENTIAL

13

Mexico
10

1970 (6.6)
2014 (2.7)

2009 (2.3)

1987 (2.1)

6
4
2
0
-2
-4
-6
1970

1975

1980

1985

1990
GDP

1995

2000

2005

2010

2015

POTENTIAL
14

Russia
15
2004 (5.9)
2014 (1.4)

10

1990 (-9.2)

-5

-10

-15
90

92

94

96

98

00
GDP

02

04

06

08

10

12

14

POTENTIAL
15

European Union
8
1970 (4.5)

2014 (0.8)

6
1999 (2.5)

2009 (0.9)

4
1982 (2.1)
2
0
-2
-4
-6
1970

1975

1980

1985

1990
GDP

1995

2000

2005

2010

2015

POTENTIAL

16

World
8
1970 (4.6)
6

2009 (2.5)

2014 (2.9)

1992 (2.8)

-2

-4
1970

1975

1980

1985

1990
GDP

1995

2000

2005

2010

2015

POTENTIAL

17

INTERNATIONAL TRADE

18

Volume of world merchandise trade

(2005=100), 1970-2012
140
120
100
80
60
2009 World Crisis
40
20
0
1970

Source: WTO (2014)

1975

1980

1985

1990

1995

2000

2005

2010

19

Volume of World Merchandise Trade and

World GDP (2005=100), 1970-2015
160
140
120
100
80
2009 Crisis
60
40
20
0
1970

1975

1980

1985

1990
GDP

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1995

2000

2005

2010

2015

Trade
20

Trade, 1970-2015
Rate of Growth
15
1997 (6.4)
10
1981 (3.2)

2014 (3.9)

-5

-10

-15
1970

1975

1980

1985

1990
Trade

1995

2000

2005

2010

2015

Trend
21

Trade Growth and Global growth

1970-2015
15

=4.77

10

= 1.50

-5

1975

-10

-15
1970

1975

1980

1982

1985

2009

1990
TRADE

SOURCE: WORLD BANK (2014) y WTO (2014 )

1995

2000

2005

2010

GDP
22

Trade Growth and Global growth,

1970-2015. HP Filter
7

1981

1996

2009

2
1970

1975

1980

1985

1990
GDP

1995

2000

2005

2010

2015

TRADE

23

ECONOMETRIC
ISSUES

24

Unit Root Tests

GDP

GDP

TRADE

TRADE

TREND AND INTERCEPT

ADF

-0.07*

-5.38

-0.99*

-7.81

PP

0.87*

-5.67

-0.46

-12.46

KPSS

23.02*

3.01

22.43*

0.18

INTERCEPT
ADF

3.57*

-4.29

2.22*

-6.67

PP

6.79*

-4.33

4.15

-6.67

KPSS

17.78*

11.11*

10.77*

4.79

NONE
ADF

12.97*

-1.55*

5.44*

0.86

PP

17.65*

-1.05*

9.25

-4.88

Note: * Unit Root at 95%

25

GDP and Trade

Scatter
6.0
5.8

LGDP

5.6
5.4
5.2
5.0
4.8
4.6
2.8

3.2

3.6

4.0

4.4

4.8

5.2

LTRADE
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26

yt = 3.20 + 0.55 tradet + et

(t)

(nd)

(-25.97)

r = 1; 1 common trend, max eigenvalue = 0.90

Johansen Test (r = 1): Trace = 0.40 (0.52); Max Eigen = 0.01 (0.52)
Correct especificacion tests:
Urzua = 3.33 (0.94); LM(11) = 3.60 (0.46); White N.C. = 64.54 (0.32)

ECM:

D(y)

D(trade)

-0.076

0.033

SD

(0.035)

(0.11)

[-2-15]

[0.30]

Granger Causality Test (VEC)

Variable
Dependiente

D(y)
D(trade)
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D(y)

D(trade)

Prob.

0.00

0.00 53.31 0.00

26.61 0.00

0.00

Prob.

0.00
28

6.2

Ajuste de Relacin de
Cointegracin

6.0
5.8
5.6
5.4
5.2
5.0
4.8
4.6
1970

1975

1980

1985
LGDP

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1990

1995

2000

2005

2010

2015

3.202182+.5525*LTRADE
29

Historical Simulation
(Broyden)
LGDP

LTRADE
5.2

6.5

4.8

6.0

4.4
5.5

4.0
3.6
3.2

2.8

.6

5.0

.4

4.5

.2

.0

-1

-.2

-2

-.4
70

75

80

85
Actuals
Deviation

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90

95

00

05

LTRADE (Scenario 1)
Percent Deviation

10

15

70

75

80

85
Actuals
Deviation

90

95

00

05

10

15

LGDP (Scenario 1)
Percent Deviation

30

Variance Decomposition
TRADE

GDP

100

90

90

80

80

70

70

60

60

50

50

40

40
30

30

20

20

10

10

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
LPIB

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LCOMER

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
LPIB

LCOMER

31

Impulse-Response

0.03

0.025

0.02

0.015

0.01

0.005

10

11

12

13

14

PIB a Comercio

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

Comercio a PIB

Generalizaded impulses. Bootstrap bands at 95%.

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32

11/04/2015

33

Thank you
Eduardo Lora
Center of Modeling and Economic
Forecasting
www.economia.unam.mx/profesores/eloria/
www.economia.unam.mx/cempe

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34