Causality Between Exports,Imports and Income In Trinidad and Tobago

This study examines the relationship between exports, imports and income in the economy of Trinidad and Tobago, using the methodology of Granger causality and error correction modeling. Our results show that there is unidirectional Granger causation from exports to income (GDP), and bidirectional causation between exports and imports and imports and income. The Economy of Trinidad and Tobago is a petroleum exporting economy where oil-export booms raise income levels, but this is usually followed by a slump. The bivariate models should be interpreted with caution because of the possibility of omitted variable bias. F14, C22]