Terms of trade and economic growth: an estimate of the threshold level of terms of trade for Malaysia

Duasa, Jarita (2011) Terms of trade and economic growth: an estimate of the threshold level of terms of trade for Malaysia. International Journal of Economics Perspectives, 5 (1). pp. 21-43. ISSN 13071637 (In Press)

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Abstract

The present study attempts to examine the non-linear relationship between terms of trade growth and economic growth in Malaysia by estimating precise threshold levels of terms of trade growth in each trading sector. In methodology, it employs relatively new econometric methods for threshold estimation and inference to ensure the significance of a structural break in the model as proposed by Hansen (1996, 2000). The results show that only prices of export and import of mineral fuels, lubricants and related materials (SITC3) is significantly and negatively affect the economic growth of the country. There also exists threshold effects in the relationship with two thresholds are identified and tested. The finding is that the negative impact is very much larger when the terms of trade growth is below the threshold of -1.576% but lesser when the terms of trade growth is higher than 0.0018%.

Item Type:	Article (Journal)
Additional Information:	3479/3996
Uncontrolled Keywords:	terms of trade; economic growth; threshold effect
Subjects:	H Social Sciences > HB Economic Theory > HB131 Methodology.Mathematical economics. Quantitative methods H Social Sciences > HB Economic Theory > HB3711 Business cycles. Economic fluctuations
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences > Department of Economics
Depositing User:	Prof. Dr. Jarita Duasa
Date Deposited:	28 Nov 2011 09:35
Last Modified:	24 May 2012 10:09
URI:	http://irep.iium.edu.my/id/eprint/3996

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