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Large versus Small Price Changes and the Demand for Imports (Demande d'importation et modification forte ou faible des prix) (Grandes y pequeñas variaciones de precios y la demanda de importación)

Author

Listed:
  • Morris Goldstein

    (International Monetary Fund)

  • Mohsin S. Khan

    (International Monetary Fund)

Abstract

This paper presents quarterly estimates of aggregate import demand functions for the period 1955-73 for 12 industrial countries: Belgium, Denmark, Finland, France, the Federal Republic of Germany, Italy, Japan, the Netherlands, Norway, Sweden, the United Kingdom, and the United States. In addition, several empirical tests are undertaken, on both aggregate and disaggregate import data, to determine whether the (demand) elasticity of imports with respect to relative prices and the speed at which actual imports adjust to the desired level are both independent of the size of the relative price change. In the estimated equations for total imports during the period 1955-73, it was observed that import demand was responsive to relative prices for 8 of the 12 countries. The sizes of these estimated price elasticities were found to be generally similar to those estimates obtained in earlier studies. Real income changes were also found to exert a significant influence on aggregate import demand; here, the quarterly estimates proved to be somewhat smaller than earlier annual or semiannual estimates. Our results also suggest the presence of time lags in the response of aggregate imports to changes in relative prices and real income. Our estimates of these lags, however, tended to be shorter (generally between one and three quarters) than is sometimes assumed. Further, there was some tentative evidence that aggregate imports adjust more rapidly to real income changes than to relative price changes. Finally, this study found no evidence that either the price elasticity of demand for imports or the speed of adjustment of actual to desired imports was significantly affected by the size of the relative price change. Further, this qualitative conclusion continued to hold when the tests were redone, in turn, with import data for manufactures, for a shorter time period, and with an alternative distributed-lag structure. /// Ce document présente des estimations trimestrielles des fonctions de la demande d'importation globale pendant la période 1955-73 pour les 12 pays industriels suivants: Belgique, Danemark, Etats-Unis, Finlande, France, Italie, Japon, Norvège, Pays-Bas, République fédérale d'Allemagne, Royaume-Uni et Suède. Il comprend également plusieurs tests empiriques, tant sur la base de données d'importation globales que fragmentaires, dont l'objet consiste à déterminer si l'élasticité (demande) des importations par rapport aux prix relatifs et la vitesse à laquelle les importations effectives atteignent le niveau souhaité, sont toutes deux indépendantes du montant de la modification des prix relatifs. Dans les équations d'estimation des importations totales pour la période 1955-73, on a observé que dans 8 des 12 pays, la demande d'importation réagissait à des prix relatifs. On s'est aperçu que les amplitudes de ces élasticités-prix estimées étaient généralement similaires à celles des estimations obtenues dans les études précédentes. Il a été également constaté que les variations du revenu réel exerçaient une grande influence sur la demande d'importation globale; mais dans cette étude, les estimations trimestrielles se sont avérées légèrement inférieures aux estimations annuelles ou semiannuelles antérieures. Nos résultats suggèrent de même une réaction décalée des importations globales aux variations des prix relatifs et du revenu réel. Mais nos estimations de ces décalages sont dans l'ensemble plus courtes (de un à trois trimestres en général) que d'autres parfois effectuées. En outre, certains faits tendent à prouver que les importations globales s'ajustent plus rapidement aux variations du revenu réel qu'aux changements des prix relatifs. Enfin, la présente étude n'est arrivée à aucune conclusion prouvant que l'élasticité-prix de la demande d'importation ou la vitesse d'ajustement entre le niveau effectif et souhaité des importations se trouvait nettement modifiée par l'importance de la variation des prix relatifs. En outre, cette conclusion de nature qualitative s'est à nouveau vérifiée lorsque les tests ont été refaits sur la base des données d'importation des fabricants pour une période plus courte, puis sur la base d'une autre structure de distribution des retards. /// En este estudio se presentan estimaciones trimestrales de las funciones agregadas de demanda de importación para el período 1955-77 en 12 países industriales: Bélgica, Dinamarca, Estados Unidos, Finlandia, Francia, Italia, Japón, Noruega, Países Bajos, Reino Unido, República Federal de Alemania y Suecia. Se han realizado además varias pruebas empíricas con los datos, tanto agregados como desagregados, de importación, para averiguar si la elasticidad (de demanda) de la importación con respecto a los precios relativos y la velocidad de ajuste de la importación efectiva al nivel deseado son independientes ambas de la dimensión de la variación relativa de precios. En las ecuaciones estimadas para la importación total durante el período 1955-73, se comprobó que la demanda de importación reaccionaba ante los precios relativos en ocho de los doce países. Se encontró que la dimensión de las elasticidades estimadas de precios era semejante en general a las estamaciones obtenidas en estudios anteriores. También se vio que las variaciones del ingreso real ejercen una influencia significativa sobre la demanda agregada de importación; en cuanto a éstas, las estimaciones trimestrales resultaron algo menores que las estimaciones anuales o semianuales anteriores. Nuestros resultados sugieren tambien la presencia de desfases cronológicos en la reacción de la importación agregada ante las variaciones en los precios relativos y el ingreso real. Sin embargo, nuestras estimaciones de dichos desfases tienden a hacerlos más cortos (generalmente entre uno y tres trimestres) de lo que se suele suponer. Además, se encontraron ciertas pruebas tentativas de que la importación agregada se ajusta con más rapidez a las variaciones del ingreso real que a las variaciones relativas de precios. Por último, en este estudio no se encontraron pruebas de que ni la elasticidad de demanda de importaciones con respecto al precio ni la velocidad de ajuste de la importación efectiva a la deseada estuvieran afectadas significativamente por la dimensión de la variación relativa de precios. Además, esta conclusión cualitativa siguió cumpliéndose cuando volvieron a efectuarse las pruebas, esta vez con datos de importación de manufacturas, para un período de tiempo más breve, y con una estructura distinta de desfase distribuido.

Suggested Citation

  • Morris Goldstein & Mohsin S. Khan, 1976. "Large versus Small Price Changes and the Demand for Imports (Demande d'importation et modification forte ou faible des prix) (Grandes y pequeñas variaciones de precios y la demanda de importación)," IMF Staff Papers, Palgrave Macmillan, vol. 23(1), pages 200-225, March.
  • Handle: RePEc:pal:imfstp:v:23:y:1976:i:1:p:200-225
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    1. Adam, Anokye M. & Tweneboah, George, 2008. "Foreign Direct Investment (FDI) and Stock market Development: Ghana Evidence," MPRA Paper 11261, University Library of Munich, Germany.
    2. Ashraf Nakibullah, 2011. "Monetary Policy and Performance of the Oil-Exporting Gulf Cooperation Council Countries," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 10(2), pages 139-157, August.
    3. Ananda Weliwita & E. M. Ekanayake, 1998. "Demand for money in Sri Lanka during the post-1977 period: a cointegration and error correction analysis," Applied Economics, Taylor & Francis Journals, vol. 30(9), pages 1219-1229.
    4. Carone, Giuseppe, 1996. "Modeling the U.S. demand for imports through cointegration and error correction," Journal of Policy Modeling, Elsevier, vol. 18(1), pages 1-48, February.
    5. Santos-Paulino, Amelia U., 2002. "The Effects of Trade Liberalization on Imports in Selected Developing Countries," World Development, Elsevier, vol. 30(6), pages 959-974, June.
    6. Ghartey, Edward E., 1998. "Monetary dynamics in Ghana: evidence from cointegration, error correction modelling, and exogeneity," Journal of Development Economics, Elsevier, vol. 57(2), pages 473-486.
    7. Abdul Qayyum & Muhammad Arshad Khan, 2003. "Capital Flows and Money Supply: The Degree of Sterilisation in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 42(4), pages 975-985.
    8. Adam, Anokye M. & Tweneboah, George, 2008. "Foreign Direct Investment and Stock market Development: Ghana’s Evidence," MPRA Paper 11985, University Library of Munich, Germany, revised 2008.
    9. Kim-Leng Goh & Sook-Lu Yong, 2007. "Bank lending and monetary policy: the effects of structural shift in interest rates," Economics Bulletin, AccessEcon, vol. 5(5), pages 1-14.
    10. Bahmani-Oskooee, Mohsen & Goswamil, Gour G. & Talukdar, Bidyut Kumar, 2005. "Exchange rate sensitivity of the Canadian bilateral inpayments and outpayments," Economic Modelling, Elsevier, vol. 22(4), pages 745-757, July.
    11. Amit Ghosh, 2013. "Cross-border production sharing and exchange-rate sensitivity of Mexico's trade balance," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(2), pages 281-297, March.
    12. Bahmani-Oskooee, Mohsen & Niroomand, Farhang, 1998. "Long-run price elasticities and the Marshall-Lerner condition revisited," Economics Letters, Elsevier, vol. 61(1), pages 101-109, October.
    13. Bahmani-Oskooee, Mohsen & Bolhassani, Marzieh & Hegerty, Scott W., 2010. "The effects of currency fluctuations and trade integration on industry trade between Canada and Mexico," Research in Economics, Elsevier, vol. 64(4), pages 212-223, December.
    14. Wilson, John F & Takacs, Wendy E, 1979. "Differential Responses to Price and Exchange Rate Influences in the Foreign Trade of Selected Industrial Countries," The Review of Economics and Statistics, MIT Press, vol. 61(2), pages 267-279, May.
    15. Tan, Anthony C.K. & Goh, Kim-Leng, 2009. "Financial Disintermediation in the 1990s : Implications on Monetary Policy in Malaysia," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 50(1), pages 1-27, June.
    16. Natalya Ketenci & Idil Uz, 2011. "Bilateral and regional trade elasticities of the EU," Empirical Economics, Springer, vol. 40(3), pages 839-854, May.
    17. Thorvaldur Gylfason, 2002. "The Real Exchange Rate Always Floats," Australian Economic Papers, Wiley Blackwell, vol. 41(4), pages 369-381, December.
    18. repec:ebl:ecbull:v:5:y:2007:i:5:p:1-14 is not listed on IDEAS
    19. Gao, Lei & Mei, Bin, 2013. "Investor attention and abnormal performance of timberland investments in the United States," Forest Policy and Economics, Elsevier, vol. 28(C), pages 60-65.
    20. Bahmani-Oskooee, Mohsen & Goswami, Gour Gobinda, 2004. "Exchange rate sensitivity of Japan's bilateral trade flows," Japan and the World Economy, Elsevier, vol. 16(1), pages 1-15, January.
    21. Ghartey, Edward E., 2001. "Macroeconomic instability and inflationary financing in Ghana," Economic Modelling, Elsevier, vol. 18(3), pages 415-433, August.
    22. Siddique, M.A.B., 1997. "Demand for machinery and manufactured goods in Malaysia," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 43(3), pages 481-486.
    23. Tiwari, Aviral & Shahbaz, Muhammad, 2011. "India's trade with USA and her trade balance: An empirical analysis," MPRA Paper 29023, University Library of Munich, Germany.
    24. MEZUI-MBENG, Pamphile, 2010. "Tramsission de la politique monétaire: le cas des pays de la CEMAC
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      ," MPRA Paper 26032, University Library of Munich, Germany.

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