Exports' Contribution to Economic Growth: Empirical Evidence for California, Massachusetts, and Texas, Using Employment Data

Abstract

The paper shows an interregional trade model from which testable parameter restrictions for economic base theory, shown to be equivalent to the hypotheses of the Granger causality test, are derived. The results of the tests for three states, based on various bifurcation methods, suggest that economic base theory holds strongly for the crudest definition of the base, but not for others. The frequency analysis indicates a likely association between inherent cyclicalities in employment growth data and economic base theory. The regional multipliers and the timing of economic adjustments to exogenous shocks are also discussed.

Foreign Industrial Exports and State Manufacturing Performance

“…At the state or regional level, the linkages between exports and economic growth have been studied within two distinct bodies of literature. The first focuses on interregional exports (e.g., Richardson 1985;Krikelas 1992;Nishiyama 1997;Mulligan and Fik 1994), while the second emphasizes international exports (e.g., Erickson 1989;Coughlin and Cartwright 1987;Manrique 1986). Studies focused on the interregional exports of states, cities and local areas typically involve application of export-base theory to the question of whether a region's export sector drives non-export activity (Nishiyama 1997;Brown et al 1992;LeSage and Reed 1989).…”

“…The first focuses on interregional exports (e.g., Richardson 1985;Krikelas 1992;Nishiyama 1997;Mulligan and Fik 1994), while the second emphasizes international exports (e.g., Erickson 1989;Coughlin and Cartwright 1987;Manrique 1986). Studies focused on the interregional exports of states, cities and local areas typically involve application of export-base theory to the question of whether a region's export sector drives non-export activity (Nishiyama 1997;Brown et al 1992;LeSage and Reed 1989). Studies of state international exports, which are more pertinent to the present study, have considered the impacts of foreign exports on state or regional economic growth (Manrique 1987;Zech 1986;Erickson 1989).…”

The Importance of Integrating Supply‐Side Factors in Economic Base Models

“…It also revealed that the inclusion of the errorcorrection variable improved forecasting accuracy, which emphasizes the importance of shortrun dynamics. A few years later, however, Nishiyama (1997) contradicted this initial result, as he found no cointegration for the states of California, Massachusetts, or Texas; however, he confirmed the observation of Gerking and Isserman (1981) regarding the sensitivity of the results to the bifurcation method used.…”

Do Stock Prices Contain Predictive Power for the Future Economic Activity? A Granger Causality Analysis in the Frequency Domain

“…The causal relationship between tax and government expenditures has been analyzed in the frequency domain by Koren and Stiassny (1998). Nishiyama (1997) applied the Geweke framework to the causality relationship between export sector growth and non-export sector growth. McGarvey (1991) used an adapted version of Geweke's framework to test the neutrality of money hypothesis that money growth has no causal effect on the relative price changes.…”