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; Diffusion Processes
- 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)
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