Publication:
Causality among trade liberalization, economic growth and income inequality: empirical evidence from Bangladesh
Abstract
The main purpose of this study is to conduct a time-series analysis to investigate empirically the causal relations among economic growth, trade liberalization and income inequality in Bangladesh between 1985 and 2018. Upon deciding the order of integration through running the stationarity test, Vector Error Correction Model has been estimated, followed by the co-integration test for determining the long-run relationship among the variables. Significant long-run relationship has been found among the variables in addition to some evidence on bi-directional causal relationship in between economic growth and income inequality and between trade liberalization and economic growth. Moreover, the most relevant endogenous variables have been picked up using the Variance Decomposition test, the results of which are presented graphically through Impulse-response Function. However, little evidence has been found regarding trade affecting income distribution significantly. Furthermore, evidence strongly recommends that investment is highly significant for trade.
Keywords
Co-integration , Causality relationship , VECM , Income-inequality , Trade openness , Impulse response function , Project paper (MSc)
Citation
Hassan, M. (2020). Causality among trade liberalization, economic growth and income inequality: empirical evidence from Bangladesh (Master dissertation). INCEIF, Kuala Lumpur. Retrieved from https://ikr.inceif.org/handle/INCEIF/3972
Publisher
INCEIF
Causality among trade