The Impact of Macroeconomic Instability on Vietnam’s Economic Openness

Abstract

This study employs the Vector Error Correction Model (VECM) along with descriptive statistics, Unit Root tests, Johansen cointegration tests, and Pairwise Granger causality tests analyzing Vietnam’s quarterly data from 1991 to 2024. The results indicate that macroeconomic instability (MII) exerted a negative impact on Vietnam’s economic openness (OPE) during this period, in both the short and long run. Meanwhile, the increasing degree of openness continues to present numerous opportunities for Vietnam’s economic development and international integration. Consequently, the study recommends monetary and fiscal policy solutions aimed at maintaining macroeconomic stability and mitigating the adverse effects of instability on the country's economic openness.