IDEAS home Printed from https://ideas.repec.org/p/bog/wpaper/159.html
   My bibliography  Save this paper

The asymmetric effect of income on import demand in Greece

Author

Listed:
  • Ioanna C. Bardakas

    (Bank of Greece)

Abstract

This paper presents empirical evidence supporting the argument that a significant asymmetry exists in the income elasticity of Greek imports. Using multivariate cointegration techniques for the estimation of long-run imports we derive short-run error correction equations that separate income elasticities for periods when income is rising and periods when it is falling. The empirical results show that the response of imports to rising income is stronger than the response of imports to falling income. The important policy implication of this asymmetry is that a consecutively positive growth would lead imports to continuously increase causing the current account deficit to persistently widen.

Suggested Citation

  • Ioanna C. Bardakas, 2013. "The asymmetric effect of income on import demand in Greece," Working Papers 159, Bank of Greece.
    • Handle: RePEc:bog:wpaper:159
    as

    Download full text from publisher

    File URL: http://www.bankofgreece.gr/BogEkdoseis/Paper2013159.pdf
    File Function: Full Text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Engle, Robert F. & Hendry, David F., 1993. "Testing superexogeneity and invariance in regression models," Journal of Econometrics, Elsevier, vol. 56(1-2), pages 119-139, March.
    2. Dipendra Sinha & Tapen Sinha, 2000. "An aggregate import demand function for greece," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 28(2), pages 196-209, June.
    3. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    4. Michael M. Knetter, 1992. "Is Price Adjustment Asymmetric?: Evaluating the Market Share and Marketing Bottlenecks Hypothesis," NBER Working Papers 4170, National Bureau of Economic Research, Inc.
    5. Costas Milas, 1998. "Demand for Greek imports using multivariate cointegration techniques," Applied Economics, Taylor & Francis Journals, vol. 30(11), pages 1483-1492.
    6. Till van Treeck, 2008. "Asymmetric income and wealth effects in a non-linear error correction model of US consumer spending," IMK Working Paper 06-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    7. 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.
    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. Athukorala, Premachandra & Menon, Jayant, 1995. "Modeling manufactured imports: Methodological issues with evidence from Australia," Journal of Policy Modeling, Elsevier, vol. 17(6), pages 667-675, December.
    10. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    11. Houthakker, Hendrik S & Magee, Stephen P, 1969. "Income and Price Elasticities in World Trade," The Review of Economics and Statistics, MIT Press, vol. 51(2), pages 111-125, May.
    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. Mubasher Iqbal & Rukshana Kalim & Noman Arshed, 2019. "Domestic and Foreign Incomes and Trade Balance - A Case of South Asian Economies," Asian Development Policy Review, Asian Economic and Social Society, vol. 7(4), pages 355-368, December.

    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. Athanasoglou, Panayiotis P. & Bardaka, Ioanna C., 2010. "New trade theory, non-price competitiveness and export performance," Economic Modelling, Elsevier, vol. 27(1), pages 217-228, January.
    2. Panayiotis P. Athanasoglou & Ioanna C. Bardaka, 2008. "Price and Non - Price Competitiveness of Exports of Manufactures," Working Papers 69, Bank of Greece.
    3. Campos, Julia & Ericsson, Neil R. & Hendry, David F., 1996. "Cointegration tests in the presence of structural breaks," Journal of Econometrics, Elsevier, vol. 70(1), pages 187-220, January.
    4. Amjad Ali & Muhammad Irfan Chani, 2013. "Disaggregated Import Demand Function: A Case Study of Pakistan," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 1(1), pages 1-14, January.
    5. Chen, Ping-Yu & Chen, Bo-Yu & Tsai, Pei-Hui & Chen, Chi-Chung, 2015. "Evaluating the impacts of a carbon tax on imported forest products—evidence from Taiwan," Forest Policy and Economics, Elsevier, vol. 50(C), pages 45-52.
    6. Committee, Nobel Prize, 2003. "Time-series Econometrics: Cointegration and Autoregressive Conditional Heteroskedasticity," Nobel Prize in Economics documents 2003-1, Nobel Prize Committee.
    7. Sunil Sharma & Neil R. Ericsson, 1998. "Broad money demand and financial liberalization in Greece," Empirical Economics, Springer, vol. 23(3), pages 417-436.
    8. Dilip Dutta & Nasiruddin Ahmed, 2004. "An aggregate import demand function for India: a cointegration analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 11(10), pages 607-613.
    9. 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.
    10. Yap, Wei Yim & Lam, Jasmine S.L., 2006. "Competition dynamics between container ports in East Asia," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(1), pages 35-51, January.
    11. Xiaojie Xu, 2017. "The rolling causal structure between the Chinese stock index and futures," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 31(4), pages 491-509, November.
    12. Ely, David & Salehizadeh, Mehdi, 2001. "American depositary receipts: An analysis of international stock price movements," International Review of Financial Analysis, Elsevier, vol. 10(4), pages 343-363.
    13. Ansharullah Tasri, 2019. "The Flypaper Effect Phenomenon: Evidence from Indonesia," European Journal of Engineering and Formal Sciences Articles, Revistia Research and Publishing, vol. 2, 2019.
    14. Grigori Fainstein & Igor Novikov, 2011. "The Comparative Analysis of Credit Risk Determinants In the Banking Sector of the Baltic States," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 20-45, June.
    15. Wilton Bernardino & João B. Amaral & Nelson L. Paes & Raydonal Ospina & José L. Távora, 2022. "A statistical investigation of a stock valuation model," SN Business & Economics, Springer, vol. 2(8), pages 1-25, August.
    16. Ashis Kumar Pradhan & Gourishankar S Hiremath, 2020. "Do external commercial borrowings and financial development affect exports?," Cogent Business & Management, Taylor & Francis Journals, vol. 7(1), pages 1796269-179, January.
    17. Frank Asche, 2001. "Testing the effect of an anti-dumping duty: The US salmon market," Empirical Economics, Springer, vol. 26(2), pages 343-355.
    18. Kremers, Jeroen J M & Ericsson, Neil R & Dolado, Juan J, 1992. "The Power of Cointegration Tests," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 325-348, August.
    19. Neil R. Ericsson & James G. MacKinnon, 2002. "Distributions of error correction tests for cointegration," Econometrics Journal, Royal Economic Society, vol. 5(2), pages 285-318, June.
    20. Jiranyakul, Komain, 2009. "Economic Forces and the Thai Stock Market, 1993-2007," MPRA Paper 57368, University Library of Munich, Germany.

    More about this item

    Keywords

    Import demand; asymmetric income elasticities; multivariate cointegration; short-run error correction; current account deficit; structural reforms.;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

    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:bog:wpaper:159. 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: Anastasios Rizos (email available below). General contact details of provider: https://edirc.repec.org/data/boggvgr.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.