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ORIGINAL ARTICLE
MARGINAL PROPENSITY TO IMPORT AND TERMS OF TRADE: PANEL GRANGER CAUSALITY EVIDENCE FROM THE EAST
AFRICAN COMMUNITY (EAC)
1
Department of Cooperative and Rural Development, University of Agriculture and Environmental Sciences, Nigeria
2
Department of Economics, Nnamdi Azikiwe University, Nigeria
3
Department of Accountancy, Renaissance University, Nigeria
4
Department of Business Administration, Enugu State University of Science and Technology, Nigeria
Submission date: 2023-07-16
Final revision date: 2024-03-28
Acceptance date: 2024-04-26
Online publication date: 2024-06-28
Publication date: 2024-06-28
Corresponding author
Innocent Chile Nzeh
Department of Cooperative and Rural Development, University of Agriculture and Environmental Sciences, Umuagwo, Nigeria
Department of Cooperative and Rural Development, University of Agriculture and Environmental Sciences, Umuagwo, Nigeria
Economic and Regional Studies 2024;17(2):251-269
KEYWORDS
JEL CLASSIFICATION CODES
C23
F31
F16
TOPICS
ABSTRACT
Subject and purpose of work: The nexus between terms of trade and marginal propensity to import and the consequent policy options arising from it among economic blocs is an area that has not been given due attention in literature. The focus of the current paper is to examine the link between the marginal propensity to import and the terms of trade in the East African Community (EAC). Materials and methods: The used annual dataset and data was analyzed using the panel Granger causality, Impulse response function and variance decomposition. Results: The results reveal that both the marginal propensity to import and the export of manufactures Granger caused terms of trade without a feedback. The results of the impulse response function revealed that terms of trade responded positively to shocks in the marginal propensity to import only in the first period. Conclusions: The study concludes marginal propensity to import is partly responsible for the changes in terms of trade.
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