Journal of Economics and Financial Analysis, 4 (1), pp. 1-14, [2020]
URI: https://ojs.tripaledu.com/index.php/jefa/article/view/51/63

Trade Liberalization and International Trade: A Case Study of China



DOI: http://dx.doi.org/10.1991/jefa.v4i1.a30

Abstract

This study investigates the effect of trade liberalization on international trade in China over the period 1980-2018. Trade openness is used as an indicator of trade liberalization. Unit root test, cointegration test, Granger causality tests, and IRFs were used in this study. The cointegration test shows that trade openness has a positive effect on exports and imports. Trade openness has a greater effect on exports than imports. Besides, export and import are positively related to gross fixed capital formation and inflation, but negatively related to oil price. Furthermore, the Granger causality test indicates that there are bidirectional short- and long-run causality relationships between trade openness and exports, and also between trade openness and imports.

Keywords

Trade Liberalization; China; Cointegration; Causality Test; Trade Openness.

JEL Classification

B17, C33, F00, F21.

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