Impact of Exports and Imports on Economic Growth of Nepal

• Activity Number: 611 - Applications in Business and Markets
• Type: Contributed
• Date/Time: Thursday, August 1, 2019 : 8:30 AM to 10:20 AM
• Sponsor: Section on Statistical Learning and Data Science
• Author(s): Mitra Lal Devkota* and Humnath Panta
• Companies: University of North Georgia and Brenau University
• Keywords: Exports; Imports; GDP; Nepal

Abstract

The aim of this paper is to investigate the short and long-run relationship and causality between the gross domestic product (GDP), exports, and imports in Nepal over the period of 1965–2017. Johansen and Juselius cointegration method and vector error correction model (VECM) are employed to examine this issue. After establishing the existence of cointegrating relationship between the variables, a VECM is estimated and the Granger causality tests were carried out within the VECM framework. The empirical results suggests that, in the long-run, the GDP is negatively related to the exports, but positively related to the imports. Furthermore, the findings suggest that, in the long-run, the GDP and the imports Granger cause the exports, while in the short run, the exports and imports Granger cause the GDP. These results may have important implications for decision making by national policymakers.