IDEAS home Printed from https://ideas.repec.org/a/ije/journl/v10y2002i2p179-199.html
   My bibliography  Save this article

Aggregate Import Demand Behavior For Indonesia: Evidence From The Bounds Testing Approach

Author

Listed:
  • Tuck Cheong Tang

Abstract

This paper empirically re-estimates the long-run relationship between Indonesian aggregate import demand and its determinants; namely, real income and relative import prices. In contrast to previous studies (Reinhart, 1995; and Senhadji, 1998), the result of the bounds test (Pesaran et al., 2001) reveals that import volume, real income and relative import prices are cointegrated. This is an important finding from the viewpoint of the Indonesian economic policy. The estimated long-run elasticity of real income and relative price are 0.98 and –0.4 respectively.

Suggested Citation

  • Tuck Cheong Tang, 2002. "Aggregate Import Demand Behavior For Indonesia: Evidence From The Bounds Testing Approach," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 10(2), pages 179-199, December.
    • Handle: RePEc:ije:journl:v:10:y:2002:i:2:p:179-199
    as

    Download full text from publisher

    File URL: http://www.iium.edu.my/enmjournal/102art4.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Pesaran, M. H. & Shin, Y. & Smith, R. J., 1996. "Testing for the 'Existence of a Long-run Relationship'," Cambridge Working Papers in Economics 9622, Faculty of Economics, University of Cambridge.
    2. Arize, Augustine C & Osang, Thomas & Slottje, Daniel J, 2000. "Exchange-Rate Volatility and Foreign Trade: Evidence from Thirteen LDC's," Journal of Business & Economic Statistics, American Statistical Association, vol. 18(1), pages 10-17, January.
    3. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    4. repec:syd:wpaper:9703 is not listed on IDEAS
    5. Hallam, David & Zanoli, Raffaele, 1993. "Error Correction Models and Agricultural Supply Response," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 20(2), pages 151-166.
    6. Roger Perman, 1991. "Cointegration: An Introduction to the Literature," Journal of Economic Studies, Emerald Group Publishing, vol. 18(3), pages 3-30, September.
    7. Mohsen Bahmani-Oskooee, 1998. "Cointegration Approach to Estimate the Long-Run Trade Elasticities in LDCs," International Economic Journal, Taylor & Francis Journals, vol. 12(3), pages 89-96.
    8. Dipendra Sinha, 1997. "Determinants of Import Demand in Thailand," International Economic Journal, Taylor & Francis Journals, vol. 11(4), pages 73-873.
    9. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    10. repec:crs:wpaper:9645 is not listed on IDEAS
    11. Carmen M. Reinhart, 1995. "Devaluation, Relative Prices, and International Trade: Evidence from Developing Countries," IMF Staff Papers, Palgrave Macmillan, vol. 42(2), pages 290-312, June.
    12. Tuck Cheong Tang & Mahendhiran Nair, 2002. "A cointegration analysis of Malaysian import demand function: reassessment from the bounds test," Applied Economics Letters, Taylor & Francis Journals, vol. 9(5), pages 293-296.
    13. Mah, Jai Sheen, 1993. "Structural change in import demand behavior: The Korean experience," Journal of Policy Modeling, Elsevier, vol. 15(2), pages 223-227, April.
    14. 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.
    15. Charalambos Pattichis, 1999. "Price and income elasticities of disaggregated import demand: results from UECMs and an application," Applied Economics, Taylor & Francis Journals, vol. 31(9), pages 1061-1071.
    16. Dilip Dutta & Nasiruddin Ahmed, 1999. "An aggregate import demand function for Bangladesh: a cointegration approach," Applied Economics, Taylor & Francis Journals, vol. 31(4), pages 465-472.
    17. Abdelhak Senhadji, 1998. "Time-Series Estimation of Structural Import Demand Equations: A Cross-Country Analysis," IMF Staff Papers, Palgrave Macmillan, vol. 45(2), pages 236-268, June.
    18. Wojciech W. Charemza & Derek F. Deadman, 1992. "New Directions In Econometric Practice," Books, Edward Elgar Publishing, number 84.
    19. Phillips, Peter C B & Ouliaris, S, 1990. "Asymptotic Properties of Residual Based Tests for Cointegration," Econometrica, Econometric Society, vol. 58(1), pages 165-193, January.
    20. Mohamed Ariff & Ahmed M. Khalid, 2000. "Liberalization, Growth and the Asian Financial Crisis," Books, Edward Elgar Publishing, number 1511.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vacu, Nomfudo P. & Odhiambo, Nicholas M., 2020. "The Determinants of Import Demand in South Africa: An Empirical Investigation," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 73(1), pages 51-76.
    2. Kira Hibbert & Ranjini Thaver & Mark Hutchinson, 2012. "An Econometric Analysis Of Jamaica’S Import Demand Function With The Us And Uk," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 6(1), pages 109-120.
    3. Mohamed Ibrahim Mugableh, 2017. "Estimating Elasticity Function of Jordanian Aggregate Import Demand," Applied Economics and Finance, Redfame publishing, vol. 4(2), pages 33-37, March.
    4. M. Adetunji Babatunde & Festus O. Egwaikhide, 2010. "Explaining Nigeria's import demand behaviour: a bound testing approach," International Journal of Development Issues, Emerald Group Publishing Limited, vol. 9(2), pages 167-187, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tang, Tuck Cheong, 2003. "An empirical analysis of China's aggregate import demand function," China Economic Review, Elsevier, vol. 14(2), pages 142-163.
    2. Khurram Ashfaq Baluch & Syed Kalim Hyder Bukhari, 2012. "Price and Income Elasticity of Imports: The Case of Pakistan," SBP Working Paper Series 48, State Bank of Pakistan, Research Department.
    3. M. Adetunji Babatunde & Festus O. Egwaikhide, 2010. "Explaining Nigeria's import demand behaviour: a bound testing approach," International Journal of Development Issues, Emerald Group Publishing Limited, vol. 9(2), pages 167-187, July.
    4. Narayan, Paresh Kumar & Narayan, Seema, 2005. "Estimating income and price elasticities of imports for Fiji in a cointegration framework," Economic Modelling, Elsevier, vol. 22(3), pages 423-438, May.
    5. Tang Tuck Cheong, 2003. "Aggregate Import Demand Function For Eighteen Oic Countries: A Cointegration Analysis," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 11(2), pages 167-195, December.
    6. Tang, Tuck Cheong, 2003. "Japanese aggregate import demand function: reassessment from the 'bounds' testing approach," Japan and the World Economy, Elsevier, vol. 15(4), pages 419-436, December.
    7. Bibhuti Ranjan Mishra & Asit Mohanty, 2017. "An Empirical Analysis of Aggregate Import Demand Function for India," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 17(4), pages 1-12, December.
    8. Tsangyao Chang & Yuan-Hong Ho & Chiung-Ju Huang, 2005. "A Reexamination Of South Korea¡¯S Aggregate Import Demand Function: The Bounds Test Analysis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(1), pages 119-128, June.
    9. Tuck Cheong Tang, 2005. "Revisiting South Korea's Import Demand Behavior: A Cointegration Analysis," Asian Economic Journal, East Asian Economic Association, vol. 19(1), pages 29-50, March.
    10. Philip Chimobi Omoke, 2012. "Aggregate Import Demand and Expenditure Components in Nigeria," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 1(1), pages 149-163, March.
    11. Tuck Cheong Tang, 2008. "Money demand function for Southeast Asian countries," Journal of Economic Studies, Emerald Group Publishing, vol. 34(6), pages 476-496, January.
    12. Fukumoto, Mayumi, 2012. "Estimation of China's disaggregate import demand functions," China Economic Review, Elsevier, vol. 23(2), pages 434-444.
    13. 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.
    14. Mah, Jai S., 2000. "An empirical examination of the disaggregated import demand of Korea--the case of information technology products," Journal of Asian Economics, Elsevier, vol. 11(2), pages 237-244.
    15. Mohsen Bahmani & Hanafiah Harvey & Scott W. Hegerty, 2013. "Empirical tests of the Marshall-Lerner condition: a literature review," Journal of Economic Studies, Emerald Group Publishing, vol. 40(3), pages 411-443, May.
    16. Muhammad Irfan CHANI & Zahid PERVAIZ & Amatul R. CHAUDHARY, 2011. "Determination of Import Demand in Pakistan: The Role of Expenditure Components," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(8(561)), pages 93-110, August.
    17. Vaona, Andrea, 2016. "The effect of renewable energy generation on import demand," Renewable Energy, Elsevier, vol. 86(C), pages 354-359.
    18. Il-Hyun Yoon & H. R. Seddighi, 2019. "Demand for Imports and Components of Final Expenditure An Empirical Study with Special Reference to the Korean Import Demand Function," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 6(1), pages 52-58.
    19. Chor Foon Tang & Hooi Hooi Lean, 2009. "The Effects Of Disaggregated Savings On Economic Growth In Malaysia - Generalised Variance Decomposition Analysis," Development Research Unit Working Paper Series 04-09, Monash University, Department of Economics.
    20. Paresh Kumar Narayan & Seema Narayan & Biman Chand Prasad, 2008. "Forecasting Fiji's exports and imports, 2003‐2020," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 35(12), pages 1005-1016, October.

    More about this item

    Keywords

    Aggregate import demand; Bounds testing approach; Indonesia;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ije:journl:v:10:y:2002:i:2:p:179-199. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gairuzazmi Mat Ghani (email available below). General contact details of provider: https://edirc.repec.org/data/feiiumy.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.