Why Do Imports Fall More than Exports Especially During Crises? Evidence from Selected Asian Economies
AbstractThis question is examined via a standard import specification augmented with differential and time-varying impacts of each component of aggregate demand: consumption, investment, government spending, and exports. Several important variables in explaining import demand such as credit conditions and business and consumer sentiment are also included. A panel fixed-effects model adjusted for cross-sectional dependence is estimated for 11 Asian economies from 1Q91 to 2Q11. The result shows the import intensity of exports is the highest among all variables. Alone, however, it does not contribute to a larger fall in imports. The larger decline in imports will be evident if other components of aggregate demand also fall, particularly investment and consumption. A weakened credit condition will also exacerbate the fall in imports. Business and consumer sentiment, however, does not seem to matter. In crisis periods more nuanced results are evident. For example, fiscal contractions may have worsened the fall in imports during the 1997/98 Asian financial crisis, while the fall in exports also has an additional adverse impact. Business and consumer sentiment seems to have a lagged positive impact during the global financial crisis.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Asian Development Bank in its series Working Papers on Regional Economic Integration with number 96.
Length: 36 pages
Date of creation: 01 Apr 2012
Date of revision:
imports; exports; Asia; ASEAN; East Asia; crisis;
Find related papers by JEL classification:
- F10 - International Economics - - Trade - - - General
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F31 - International Economics - - International Finance - - - Foreign Exchange
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-02 (All new papers)
- NEP-CWA-2012-05-02 (Central & Western Asia)
- NEP-SEA-2012-05-02 (South East Asia)
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ivan B. de Leon).
If references are entirely missing, you can add them using this form.