Working Paper Series: Special Edition of 2016 to 2018 Interns

Table 2: Panel unit root test

Im, Pesaran & Shin (IPS)

Im, Pesaran & Shin (IPS)

Variable

Hadri

Hadri

Level

1D

Ln eg

0.2521

0.0000

0.0000

0.1727

Ln fdi

0.3363

0.0143

0.0000

0.7098

Ln to

0.2122

0.0000

0.0000

0.5379

Ln gov

0.8158

0.0000

0.0000

0.4852

Ln hhc

0.7148

0.0000

0.0000

0.3971

Ln ta

0.3853

0.0041

0.0000

0.1511

Resid 0.4899 Variables are I (1) at 5 % level of significance 0.0000

5.2 Cointegration test After detecting cointegration relationships, equation 2 fitted with to and then with ta was estimated. The results are opposing; they indicated that trade openness has no long-run relationship with economic growth in the ECCU while tourism arrivals have such a relationship.

� p-value 0.0821*

Table 3: DOLS coefficient results

Equation

FDI1

0.049915

TO

0.048181

0.6880

FDI2

0.052102

0.0507

TA 0.0532 * Significant at 10 % level of significance 0.363235

According to Table 3, the long-run coefficient on ta is 0.4 and is significant at 5 per cent level of significance. Further, since the model is estimated in logarithms then this indicates the elasticity of ta would cause a 0.4 percentage point increase in economic growth given a 1 per cent increase

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