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Abstract

This paper explores the impacts of foreign and domestic demand on Indonesia's exports within demand and supply frameworks using aggregate data of 1971 - 2007. To capture effects of secular and cyclical movements on exports, we dissect income variables into trend and business cycle as proxies of productive capacity and capacity utilization rate, respectively. Our result suggests that both demand- and supply-price elasticity are elastic, and secular and cyclical movements may have contrast effects on exports. The findings draw policy implications namely the importance of price-based policy, provision of adequate and sound infrastructures, and further development of human capital-based industrialization.

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File URL: http://ir.lib.hiroshima-u.ac.jp/metadb/up/ZZT00001/IDEC-DP2_01-4.pdf
File Function: First version, 2011
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File URL: http://ir.lib.hiroshima-u.ac.jp/metadb/up/ZZT00001/IDEC-DP2_01-4R.pdf
File Function: Revised version, 2012
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Bibliographic Info

Paper provided by Hiroshima University, Graduate School for International Development and Cooperation (IDEC) in its series IDEC DP2 Series with number 1-4.

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Length: 28 pages
Date of creation: Sep 2011
Date of revision: Jan 2012
Publication status: Published in Modern Economy, Vol.3 No.1, January 2012, Pages 32-42
Handle: RePEc:hir:idecdp:1-4

Contact details of provider:
Web page: http://www.hiroshima-u.ac.jp/en/idec/
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Related research

Keywords: Exports; demand and supply for exports; domestic demand pressure; Indonesia; simultaneous equations.;

Find related papers by JEL classification:

• C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
• F11 - International Economics - - Trade - - - Neoclassical Models of Trade
• O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

This paper has been announced in the following NEP Reports:

• NEP-ALL-2011-11-21 (All new papers)
• NEP-CSE-2011-11-21 (Economics of Strategic Management)
• NEP-DEV-2011-11-21 (Development)
• NEP-INT-2011-11-21 (International Trade)
• NEP-SEA-2011-11-21 (South East Asia)

References

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1. Murray, Tracy & Ginman, Peter J, 1976. "An Empirical Examination of the Traditional Aggregate Import Demand Model," The Review of Economics and Statistics, MIT Press, vol. 58(1), pages 75-80, February.
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3. Alberto Behar & Lawrence Edwards, 2004. "Estiimating Elasticities Of Demand And Supply For South African Manufactured Exports Using A Vector Error Correction Model," Development and Comp Systems 0409045, EconWPA.
   
   • Alberto Behar & Lawrence Edwards, 2004. "Estimating elasticities of demand and supply for South African manufactured exports using a vector error correction model," CSAE Working Paper Series 2004-04, Centre for the Study of African Economies, University of Oxford.
   • Alberto Behar and Lawrence Edwards, 2004. "Estimating elasticities of demand and supply for South African manufactured exports using a vector error correction model," Economics Series Working Papers WPS/2004-04, University of Oxford, Department of Economics.
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   • Faini, Ricardo, 1988. "Export supply, capacity, and relative prices," Policy Research Working Paper Series 123, The World Bank.
10. Jean-Philippe Cotis & Jonathan Coppel, 2005. "Business Cycle Dynamics in OECD Countries: Evidence, Causes and Policy Implications," RBA Annual Conference Volume, in: Christopher Kent & David Norman (ed.), The Changing Nature of the Business Cycle Reserve Bank of Australia.
11. Prema-Chandra Athukorala, 2006. "Post-crisis export performance: The Indonesian experience in regional perspective," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 42(2), pages 177-211.
12. Koshal, Rajindar K. & Shukla, Vishwa S. & Koirala, Govinda P., 1992. "Demand and supply of Indian exports: A simultaneous equation approach," Journal of Asian Economics, Elsevier, vol. 3(1), pages 73-83.
13. Russell W. Davidson & James G. MacKinnon, 1985. "The Interpretation of Test Statistics," Canadian Journal of Economics, Canadian Economics Association, vol. 18(1), pages 38-57, February.
    
    • Davidson, R. & Mackinnon, J.G., 1985. "The interpretation of test statistics," CORE Discussion Papers 1985001, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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19. Farley, John U. & Hinich, Melvin & McGuire, Timothy W., 1975. "Some comparisons of tests for a shift in the slopes of a multivariate linear time series model," Journal of Econometrics, Elsevier, vol. 3(3), pages 297-318, August.
20. Muscatelli, Vito Antonio & Stevenson, Andrew A & Montagna, Catia, 1995. "Modeling Aggregate Manufactured Exports for Some Asian Newly Industrialized Economies," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 147-55, February.
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    • Siregar, Reza & Rajan, Ramkishen S., 2004. "Impact of exchange rate volatility on Indonesia's trade performance in the 1990s," Journal of the Japanese and International Economies, Elsevier, vol. 18(2), pages 218-240, June.
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