A Cointegration Analysis: Investigating the Long-Term Relationships among FDI Inflows, GDP, and Trade Openness in Brazil

Abstract

Time series analysis relies heavily on the idea of stationarity to distinguish between trends that have long-lasting effects on economic variables and shocks that pass quickly. An in-depth investigation of the stationarity of important metrics, such GDP, FDI inflows, and trade openness, in the context of Brazil’s economic environment reveals vital information for economic modelling and policymaking. The results found that, there is significant bi-directional causality between GDP and FDI inflows, but no substantial causal relationship between trade openness and other variables.