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GDP and population growth: Evidence of fractional cointegration with historical data from 1820 onwards

Luis Gil-Alana (Economics, University of Navarra, Pamplona, Spain)
Cecilia Font (Francisco de Vitoria University, Pozuelo de Alarcon, Spain)
Águeda Gil-López (Francisco de Vitoria University, Pozuelo de Alarcon, Spain)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 11 March 2021

Issue publication date: 11 February 2022

630

Abstract

Purpose

Using data from 1820 onwards in a group of seven countries, namely, Australia, Chile, Denmark, France, the UK, Italy and the USA, the authors investigate if there is a long-run equilibrium relationship between the two variables (GDP and population).

Design/methodology/approach

Using fractional integration and cointegration methods, this paper deals with the analysis of the relationship between GDP and population using historical data.

Findings

The authors’ results show first that the two series are highly persistent, presenting orders of integration close to or above 1 in practically all cases. Testing cointegration between the two variables, the results are quite variable depending on the methodology and the bandwidth numbers used, but if cointegration takes places, it only occurs in the cases of France, Italy and the UK.

Research limitations/implications

The fact that the orders of integration of all series is close to 1 indicate high levels of persistence with shocks having permanent effects and requiring strong measures to recover the original trends.

Practical implications

Any shock affecting the series will have a permanent nature, persisting forever.

Originality/value

Updated time series techniques based on concepts such as fractional integration and cointegration are used.

Keywords

Acknowledgements

Luis A. Gil-Alana gratefully acknowledges financial support from the MINEIC-AEI-FEDER ECO2017-85503-R project from ‘Ministerio de Economía, Industria y Competitividad’ (MINEIC), ‘Agencia Estatal de Investigación’ (AEI) Spain and ‘Fondo Europeo de Desarrollo Regional’ (FEDER). An internal Project from the Universidad Francisco de Vitoria is also acknowledged.

Citation

Gil-Alana, L., Font, C. and Gil-López, Á. (2022), "GDP and population growth: Evidence of fractional cointegration with historical data from 1820 onwards", Journal of Economic Studies, Vol. 49 No. 2, pp. 379-393. https://doi.org/10.1108/JES-06-2020-0307

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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