Imports and exports in 50 countries Tests of cointegration and structural breaks Augustine C. Arize* College of Business and Technology, Texas A&M University-Commerce, Commerce, TX 75429, USA Received 14 February 2000; received in revised form 18 October 2000; accepted 9 February 2001 Abstract This paper provides new evidence on the long-run convergence between imports and exports in 50 countries over the quarterly period 1973:2 to 1998:1. Cointegration analyses are based on the Johansen [Johansen, S. (1995). Likelihood-based inference in cointegrating vector autoregressive models. New York: Oxford University Press.] and the Stock and Watson [J. Am. Stat. Assoc. 83 (1988) 1097.] system approaches. Evidence of stability of the cointegration space is examined using the SupF test developed by Hansen [J. Bus. Econ. Stat. 10 (1992) 321]. Based on the Johansen technique, we find evidence in favor of cointegration in 35 of the 50 countries. In addition, cointegration is confirmed for all countries (except Mexico) using the Stock and Watson test. This finding indicates that macroeconomic policies have been effective in the long-run and suggests that these countries are largely not in violation of their international budget constraint. We find evidence that in most of the countries where the slope coefficient on the export variable is positive, the cointegrating coefficient is also unity. The cointegration space appears stable for most of the countries. Nonetheless, the results suggest that countries in the regions of the Middle East, Latin America, and Europe have cointegrating relations that are more unstable than those in other regions. D 2002 Published by Elsevier Science Inc. JEL classification: F14; F35 Keywords: Imports; Exports; Cointegration; Structural instability 1059-0560/02/$ – see front matter D 2002 Published by Elsevier Science Inc. PII:S1059-0560(01)00101-0 * Tel.: +1-903-886-5691; fax: +1-903-886-5691. E-mail address: chuck _ arize@tamu-commerce.edu (A.C. Arize). International Review of Economics and Finance 11 (2002) 101–115