Import demand in heterogeneous panel setting
AbstractTo study the elasticities of import demand function, a heterogeneous panel is built with data of 40 countries and using panel unit root tests (Im et al., 1997) and panel cointegration tests (Pedroni, 2004). The model is tested with two previously used activity variables: GDP and GDP minus Export for a performance comparison. To estimate elasticities, use is made of two modified panel versions of FMOLS and DOLS developed by Pedroni (1996, 2000, 2001). The tests prove that GDP outperforms GDP minus Exports as an activity variable in the cointegration context. FMOLS and DOLS give close results when individual estimates are done. When between-dimension estimators are used, conflicting results are obtained. Then, the sample is split into developed and developing countries and it is shown that income elasticity in developing countries are not different than unity on average and are higher than in developed countries contradicting previous literature results.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics.
Volume (Year): 37 (2005)
Issue (Month): 20 ()
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Other versions of this item:
- F10 - International Economics - - Trade - - - General
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
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