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Estimating the import demand function for China

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  • Wang, Yi-Hsien
  • Lee, Jun-De

Abstract

This paper estimates the import demand elasticity for China using three fully efficient cointegrating regressions and the autoregressive distributed lag (ARDL) method. This paper is the first to accommodate the perception of global risk in an investigation of the information transmission mechanism between the relationship import demand and its determinants in China. The empirical results show that real imports are cointegrated with domestic economic activity, real effective exchange rate, and the perception of global risk. Domestic income is found to have a significantly positive effect on imports. Contrary to theory, the real effective exchange rate carries negative coefficients, which suggests that a decrease in external competitiveness (appreciation) will decrease the level of imports in the case of China. One of the reasons for this may be the tied anti-dumping duty on some import items. Since the perception of global risk adversely affects China's aggregated imports, policy-makers should consider the degree to which the perception of global risk affects the implementation of trade policies.

Suggested Citation

  • Wang, Yi-Hsien & Lee, Jun-De, 2012. "Estimating the import demand function for China," Economic Modelling, Elsevier, vol. 29(6), pages 2591-2596.
  • Handle: RePEc:eee:ecmode:v:29:y:2012:i:6:p:2591-2596
    DOI: 10.1016/j.econmod.2012.08.002
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    References listed on IDEAS

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    Cited by:

    1. Ertan Oktay & Giray Gozgor, 2013. "Estimation of disaggregated import demand functions for Turkey," Economics Bulletin, AccessEcon, vol. 33(1), pages 575-585.
    2. Arzu Tay Bayramoglu & Deniz Sukruoglu, 2016. "Non-Energy Import Demand Function in Turkey: New Evidence," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 6(12), pages 750-761, December.
    3. Gozgor, Giray, 2014. "Aggregated and disaggregated import demand in China: An empirical study," Economic Modelling, Elsevier, vol. 43(C), pages 1-8.
    4. repec:sae:globus:v:19:y:2018:i:3:p:543-555 is not listed on IDEAS
    5. Muhammad Ahad & Adeel Ahmad Dar, 2018. "A Dynamic Relationship between Financial Development and Import Demand for Bangladesh: An Evidence from Combine Cointegration and Granger Causality Approach," Global Business Review, International Management Institute, vol. 19(3), pages 543-555, June.
    6. Kamel Jlassi, 2015. "Modelling and Forecasting of Tunisian Current Account: Aggregate versus Disaggregate Approach," IHEID Working Papers 13-2015, Economics Section, The Graduate Institute of International Studies.

    More about this item

    Keywords

    Import demand; Global risk perception; ARDL; Cointegrating regression;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General

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