Abstract

This paper examines whether or not the export insurance subsidy provided by the British government has promoted Britain.s export supply. Unlike previous studies on the effectiveness of export subsidy in export supply, the current study examines the stationarity nature of the concerned variables. The unit root tests show that all concerned variables are integrated of order one. According to Johansen cointegration test, the concerned variables are not cointegrated. The empirical evidences using the first differenced data show that the export subsidy in terms of provision of export insurances by the government is not statistically significant in increasing export supply.

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