Revaluating the relationship between productivity and exports through nonlinear error correction model: empirical evidences for United States, Canada, Japan and Germany

Abstract

The aim of this paper is to evaluate the relationship between exports and productivity using Multiple Regimes Smooth Transition Vector Error- Correction Model (MR-STVEC) for a sample of four developed countries (United States, Canada, Japan and Germany). MR-STVEC models require a previous strategy of identification. Based on the strategy used by Lundbergh et al. (2003), we apply two different likelihood ratio tests. The results indicate that exports may reverse negative productivity shocks. In particular, for Canada and Germany, exports are able to act as a restriction to an increase in productivity when there are positive shocks.

Keywords

• Exports
• Productivity
• Nonlinear models.