Great ratios and international openness

Juin Jen Chang, Chang-Ching Lin, Hsieh Yu Lin

Research output: Contribution to journalArticle

Abstract

The great ratios have been regularly used to calibrate the long-run properties of theoretical macroeconomic models; yet their stationarity is not supported by empirical studies unequivocally. This paper empirically tests whether the international openness governs the stationarity of the great ratios. By considering 21 OECD countries, our results show that the countries with relatively high openness are less likely to exhibit a balanced-growth-path equilibrium. By controlling for a potential endogeneity problem, the great ratios are less likely to be stationary if the economy runs a surplus trade balance.

Original languageEnglish
Pages (from-to)110-121
Number of pages12
JournalInternational Review of Economics and Finance
Volume41
DOIs
Publication statusPublished - 2016 Jan 1

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Openness
Stationarity
Empirical study
Trade balance
OECD countries
Endogeneity
Balanced growth path
Surplus
Macroeconomic models

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Cite this

Chang, Juin Jen ; Lin, Chang-Ching ; Lin, Hsieh Yu. / Great ratios and international openness. In: International Review of Economics and Finance. 2016 ; Vol. 41. pp. 110-121.
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Great ratios and international openness. / Chang, Juin Jen; Lin, Chang-Ching; Lin, Hsieh Yu.

In: International Review of Economics and Finance, Vol. 41, 01.01.2016, p. 110-121.

Research output: Contribution to journalArticle

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