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Price and Income Elasticity of Imports: The Case of Pakistan

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  • Khurram Ashfaq Baluch

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  • Syed Kalim Hyder Bukhari

Abstract

The paper estimates the elasticity of Imports with respect to relative prices and income for Pakistan from 1971 to 2009. What distinguishes this paper from the earlier studies is the use of robust estimation technique of Autoregressive Distributed Lag (ARDL) model utilizing the bounds test procedure. The results point to cointegration among the variables. The estimated long run elasticity of Imports with respect to relative prices and income are -0.53 and 1.22 respectively. [SBP WP No. 48]. URL:[http://www.sbp.org.pk/publications/wpapers/2012/wp48.pdf].

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Bibliographic Info

Paper provided by eSocialSciences in its series Working Papers with number id:4899.

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Date of creation: Mar 2012
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Handle: RePEc:ess:wpaper:id:4899

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Related research

Keywords: Income Elasticity; exports; Price; Pakistan; Balance of Payments (BoP) account; foreign deficit; GDP; exchange rate; relative prices; imports; demand; Autoregressive Distributed Lag model (ARDL); substitution industries; Ordinary Least Squares (OLS);

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  16. 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.
  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.
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  19. 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 1057-72, June.
  20. Bardsen, G., 1988. "On The Estimation Of Long Run Coefficients In Error Correction Models," Papers 03-88, Norwegian School of Economics and Business Administration-.
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  23. Bahmani-Oskooee, Mohsen & Rhee, Hyun-Jae, 1997. "Structural change in import demand behavior, the Korean experience: a reexamination," Journal of Policy Modeling, Elsevier, vol. 19(2), pages 187-193, April.
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