Does international trade promote economic growth? Europe, 19th and 20th centuries

In this paper, we analyse the relationship between international trade and economic growth in an
unbalanced panel of 20 European countries in a long-term perspective, since the mid-19th century
to present days, differentiating between the periods before and after the start of the Second
World War. To this end, we perform Granger-causality tests between exports and GDP, and between
imports and GDP, following the novel methodology of Juodis et al. (2021) for panel data
models with large cross-sectional and time series dimensions. Our results support the existence of
a bi-directional relationship between both trade variables and GDP, for the whole period and
across subperiods.