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Title: Back to basics: Robust tests and their implications for the Prebisch singer hypothesis and economic growth Authors:  Gareth Liu-Evans - University of Liverpool (United Kingdom) [presenting]
Stephan Pfaffenzeller - University of Liverpool (United Kingdom)
Yan Zhu - unaffiliated (United Kingdom)
Abstract: The Prebisch Singer hypothesis postulates a dramatic decline in the barter terms of trade of developing countries acting as a constraint on economic development, and one prediction of this is a decline in the export earnings of developing countries. No dramatic decay in developing countries' export earnings has been observed over the most recent decades, however. The existence of a trade balance constraint effect is investigated via a recent lasso-based treatment test that can account for unknown functional form in a semiparametric model and confounding effects on the treatment variable. The unknown functional form is allowed to draw from a large number of B-spline terms, making use of the test's applicability in high-dimensional econometric settings. Moreover, a unit root-robust trend testing procedure is applied to the constituent series of an updated Grilli and Yang data set, circumventing any ambiguity over the order of integration for each series.