Research on Chosen Macroeconomic Indicators of Romania

Abstract

The purpose of this paper is to investigate the long-run and short-run relationships between economic growth, exports, imports, exchange rate, and interest rate in the case of Romania using the bounds F testing approach developed within autoregressive distributed lag (ARDL) framework by the quarterly time series data for the period 2000q1-2013q4. A time dummy variable was specified to measure the effect of Romania’s participation to European Union. Unit root tests were performed to examine variables’ level of integration. Relatively new ARDL bounds F testing cointegration method employed has good small sample properties and provides more robust and reliable results. Long-run, short-run and the stronger form of the Granger causalities from the each of the four explanatory variables namely exports, imports, exchange rates and interest rates to gross domestic product were investigated by using Granger non-causality tests. CUSUM and CUSUMSQ stability tests were also implemented. The empirical results of this paper are enlightening with regard to trade policies for the policy makers of Romania.

DOI: 10.5901/mjss.2014.v5n22p326