Economic growth and customs unions: An empirical investigation
Economic growth and customs unions: An empirical investigation

Summary/Abstract: A significant area of research in macroeconomics is devoted to understanding how customs unions affect the economies of the participating countries. This paper examines the effects of the EU Customs Union on Greece’s economic growth and development. We employ advanced econometric methodologies to investigate the stationarity properties of the variables, examine the existence of a long-run causal relationship among the variables within the cointegration framework, and study possible short-run causal effects. The empirical results confirm a cointegrating relationship which suggests that long-run causal effects exist among the selected variables of our model. Investment in physical capital and the number of workers are statistically significant, while the magnitude of the number of workers is far greater than that of investment in physical capital. We also construct and employ a suitable time dummy variable that is statistically significant and indicates that Greek income has been negatively impacted by the accession of the country to the EU. Further investigation shows that a long-run asymmetric relationship does not exist.

• Details
• Contents