As a result, the order of the lag length for the dynamic bi-variate VAR models ranges
between five and six lags and their respective causality test results are reported Table 3.
The test results using bi-variate VAR(5) suggest that there is no evidence of causality
running from OFDI from Malaysia to home country GDP growth as well as in the reverse
direction, partly because the time horizon of 5-quarter lag is too short for both
macroeconomic variables to have impact on each other. However, if bi-variate VAR(6) is
estimated, the test results advocate that there is a unidirectional causal linkage that runs