The aim of this paper is to provide new estimates of the income and price elasticities of the demand for imports in Argentina. Given the non-stationary nature of the data and to avoid problems of spurious regression we applied co-integration techniques to quarterly data over the period 1970:1 -2005:4. Three results are worth mentioning. First, there is a statistically significant and stable long-run relationship between the level of imports, real income and the exchange rate. Second, in the long run, a very high-income elasticity and a low real exchange rate elasticity determine the demand for imports. This result confirms an old argument concerning Argentina's constraint to economic growth as originally developed by the well-known structural approach. Third, while the linear error correction models show problems of misspecification, a non-linear STAR model demonstrates that deviations from long-run equilibrium adjust not only in a non-linear way but also at a slower speed of adjustment than the linear one.
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Paper provided by Lancaster University Management School, Economics Department in its series Working Papers with number
004670.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Balke, Nathan S & Fomby, Thomas B, 1997.
"Threshold Cointegration,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(3), pages 627-45, August.
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