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Demand for Greek imports using multivariate cointegration techniques

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  • Costas Milas

Abstract

Starting from a theoretical model with importable, traded and nontraded goods, we identify a long run relationship among Greek imports, domestic activity and relative prices. The model supports weak exogeneity of relative prices which means that Greek importers take the price of imports as given. The greater than one income elasticity, which persists even when cyclical demand effects are netted out, means that Greece faces an external constraint on growth as verified by the negative effect of the disequilibrium error in the short run output equation. The findings of this paper suggest that the price of domestic tradeables and nontradeables are significant determinants of the long run and short run import demand, while instability in domestic inflation is found to have a strong short run depressing effect on domestic activity.

Suggested Citation

  • Costas Milas, 1998. "Demand for Greek imports using multivariate cointegration techniques," Applied Economics, Taylor & Francis Journals, vol. 30(11), pages 1483-1492.
    • Handle: RePEc:taf:applec:v:30:y:1998:i:11:p:1483-1492
    DOI: 10.1080/000368498324823
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    Cited by:

    1. 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.
    2. Khurram Ashfaq Baluch & Syed Kalim Hyder Bukhari, 2012. "Price and Income Elasticity of Imports: The Case of Pakistan," Working Papers id:4899, eSocialSciences.
    3. Ioanna C. Bardakas, 2013. "The asymmetric effect of income on import demand in Greece," Working Papers 159, Bank of Greece.
    4. Hui-Chuan Chen, 2002. "Taiwan's exports and trade imbalance against US and Japan: an empirical investigation based on error correction model," Applied Economics, Taylor & Francis Journals, vol. 34(18), pages 2303-2309.
    5. 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.

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