Trade, growth and growth volatility: New panel evidence

Dong Hyeon Kim, Shu Chin Lin, Yu Bo Suen

Research output: Contribution to journalArticlepeer-review

44 Citations (Scopus)


This paper examines the relationships of trade with economic growth and growth volatility using the Chudik and Pesaran (2013) cross-sectionally augmented autoregressive distributed lag (CS-ARDL) panel data approach to account for the potential dynamic heterogeneity and cross-section dependency in the effects of trade. Some important results emerge. First, greater international trade, on average, promotes economic growth and amplifies growth volatility in the long run, and hence induces a positive long-run association between growth and growth volatility. Second, greater international trade stimulates economic activities and mitigates economic fluctuations, on average, in the short run, and therefore causes a negative short-run correlation between growth and growth volatility. And third, there is large heterogeneity in the effects of trade, depending upon a country's development level, financial system, macroeconomic policies, human capital, corruption, and labor regulation.

Original languageEnglish
Pages (from-to)384-399
Number of pages16
JournalInternational Review of Economics and Finance
Publication statusPublished - 2016 Sept 1

Bibliographical note

Funding Information:
The third author gratefully acknowledges the financial support of National Science Council through grant NSC102-2410-H-156-004 . The usual disclaimer applies.

Publisher Copyright:
© 2016

Copyright 2016 Elsevier B.V., All rights reserved.


  • Economic growth
  • Growth volatility
  • Heterogeneous panel
  • Trade openness

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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