Export Led Growth Hypothesis: The Croatian Case Revisited
This paper aims to examine the non-linear adjustments between exports and GDP in Croatia. This paper analyses
quarterly data since the first quarter of 1997 to the second quarter of 2016 to support for export-led growth hypothesis in the
Croatian economy. Unlike previous studies, the paper takes into account the possible nonlinear asymmetric effects of exports
and GDP toward their long-run equilibrium. The results reveal a threshold co-integrating relationship between the two
variables with significantly different error correction adjustments in normal and extreme regimes. The research results
supported export export-led growth hypothesis in Croatia during the extreme regime only pointing on the seasonal effect on
growth that may arise out of tourism activity.
Keywords - Time series; Nonlinearity; Threshold Vector Error Correction; Exports; Economic growth.