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Does foreign policy determine foreign trade? Cointegration analysis of exports from selected countries to the Middle East

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Abstract:

The paper analyses the relations between foreign policy and export performance. The paper deals with exports of selected European countries and the USA to Middle Eastern countries including Israel. Cointegration analysis is used to identify common stochastic trends in export series. A long-term relationship implies no significant influence of foreign policy differences on trade performance. According to the Johansen tests applied to bivariate and multivariate models, German, Austrian, Dutch and EU exports to Israel are cointegrated with the US exports, while Swiss exports are never cointegrated with the exports of these countries. This result confirms the importance of foreign policy in trade performance.

Document Type: Research Article

DOI: https://doi.org/10.1080/0003684022000018196

Affiliations: 1: Oesterreichische Nationalbank, Foreign Research Division, Otto-Wagner-Platz 3, POB 61, A-1011 Vienna, Austria, and Comenius University, Faculty of Mathematics, Physics and Informatics, Department of Economic and Financial Models, Bratislava, Slovakia 2: OECD, 2 rue André Pascal, F-75775 Paris, France, and University of Technology, Vienna, Austria 3: The Vienna Institute for International Economic Studies (WIIW), Oppolzergasse 6, A-1010 Vienna, Austria

Publication date: 2003-03-01

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