Bilateral Export and Import Demand Functions of Bangladesh: A Cointegration Approach
AbstractThe past attempts to investigate whether the Marshall-Lerner condition is fulfilled by using aggregate data in Bangladesh suffer from aggregation bias. This paper estimates trade elasticities using bilateral data between Bangladesh and its major trading partners. The results, using data covering 1973-2009, confirm long run relationships of volumes of export and import with real exchange rate and real income. The study unveils that the Marshall-Lerner condition holds only in case of the United States. As such, the depreciation of real exchange rate may not be effective in improving the trade balance of Bangladesh in the long run.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 36919.
Date of creation: Mar 2012
Date of revision:
Publication status: Published in Bangladesh Development Studies March 2012, No. 1.Vol. X(2012): pp. 43-60
Bilateral Marshall-Lerner condition; Cointegration; Exchange Rate; Bangladesh;
Find related papers by JEL classification:
- F15 - International Economics - - Trade - - - Economic Integration
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F31 - International Economics - - International Finance - - - Foreign Exchange
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-08-23 (All new papers)
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.:
- Bahmani-Oskooee Mohsen & Taggert Brooks, 1999. "Cointegration Approach to Estimating Bilateral Trade Elasticities Between U.S. and Her Trading Partners," International Economic Journal, Taylor & Francis Journals, vol. 13(4), pages 119-128.
- Jiranyakul, Komain & Brahmasrene, Tantatape, 2002. "An Analysis of the Determinants of Thailand’s Exports and Imports wtih Major Trading Partners," MPRA Paper 45080, University Library of Munich, Germany.
- Anisul Islam & M. Kabir Hassan, 2004. "An econometric estimation of the aggregate import demand function for Bangladesh: some further results," Applied Economics Letters, Taylor and Francis Journals, vol. 11(9), pages 575-580.
- Shahe Emran, M. & Shilpi, Forhad, 1996. "Foreign exchange rationing and the aggregate import demand function," Economics Letters, Elsevier, vol. 51(3), pages 315-322, June.
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