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Estimating the import demand function in the autoregressive distributed lag framework: The case of China

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Author Info

  • Fengbao Yin

    ()
    (Kobe University)

  • Shigeyuki Hamori

    ()
    (Kobe University)

Abstract

This paper uses the concept of cointegration for empirically analyzing the long-run relationship of China's import demand function. The analysis employs the annual data for the sample period from 1978 to 2009. The purpose of this study is to investigate and explain China's import demand functions and provide a more in-depth analysis of China's import behavior. The autoregressive distributed lag (ARDL) and dynamic ordinary least square (DOLS) techniques were used for estimating the long-run coefficients of price and income elasticities. The empirical results from ARDL bound testing approach and Johansen's method of cointegration provide strong evidence of the existence of a long-run stable relationship among the variables included both in the traditional model and the disaggregated expenditure model of import demand. In addition, the disaggregated import demand model estimated in this paper provides a complete description of the determinants of China's imports, and offers empirical results that are significantly different from those obtained in existing studies (Tang, 2003). This is an important finding for resolving the issue of trade imbalance from the perspective of China's policy formulation.

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File URL: http://www.accessecon.com/Pubs/EB/2011/Volume31/EB-11-V31-I2-P146.pdf
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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 31 (2011)
Issue (Month): 2 ()
Pages: 1576-1591

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Handle: RePEc:ebl:ecbull:eb-11-00136

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Related research

Keywords: Import Demand Function; China; ARDL Model; Dynamic OLS; Bounds Test;

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References

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  1. Santos-Paulino, Amelia U., 2002. "The Effects of Trade Liberalization on Imports in Selected Developing Countries," World Development, Elsevier, vol. 30(6), pages 959-974, June.
  2. Bahmani-Oskooee, Mohsen & Niroomand, Farhang, 1998. "Long-run price elasticities and the Marshall-Lerner condition revisited," Economics Letters, Elsevier, vol. 61(1), pages 101-109, October.
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Cited by:
  1. Ertan Oktay & Giray Gozgor, 2013. "Estimation of disaggregated import demand functions for Turkey," Economics Bulletin, AccessEcon, vol. 33(1), pages 575-585.
  2. Bernhardt, Thomas, 2014. "How promising is South-South trade as a contributor to economic development in Asia and South America? Insights from estimating income elasticities of import demand," MPRA Paper 56413, University Library of Munich, Germany.
  3. Sadaf Majeed & Abdul Waheed, 2012. "Analyzing the Import Demand Function with Expenditure Components: Evidence from Pakistan," Transition Studies Review, Springer, vol. 19(2), pages 245-259, November.

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