Investigation on the Relationship between Romanian Foreign Trade and Industrial Production

Abstract

This paper investigates the interactions among the Romanian industrial production, exports and imports after the adhesion to European Union. We employ monthly values testing for the Granger Causality between the variables in a Vector Autoregression framework. Our results indicate significant causalities among the variables, especially the one from the returns of exports to the returns of the industrial production index. We could consider these findings as an argument in favor of the Exports-Led Growth Hypothesis.

Keywords: Industrial Production, Exports, Imports, Granger Causality

JEL Classification: F40, F43, O40, O49