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An aggregate import demand function for Bangladesh: a cointegration approach


  • Dilip Dutta
  • Nasiruddin Ahmed


This paper investigates the existence of a long-run aggregate merchandise import demand function for Bangladesh during the period 1974 - 94. The cointegration and error correction modelling approaches have been applied. Empirical results suggest that there exists a unique long-run or equilibrium relationship among real quantitities of imports, real import prices, real GDP and real foreign exchange reserves. The dynamic behaviour of import demand has been investigated by estimating two types of error correction models, in which the error correction terms have been found significant. In model I, real import prices and real GDP (lagged one year) and in model II, real import prices, real GDP (lagged one year), real imports (lagged one quarter) and a dummy variable capturing the effects of import liberalization policies have all emerged as important determinants of import demand function. The error correction models have also been found to be robust as they satisfy almost all relevant diagnostic tests.

Suggested Citation

  • Dilip Dutta & Nasiruddin Ahmed, 1999. "An aggregate import demand function for Bangladesh: a cointegration approach," Applied Economics, Taylor & Francis Journals, vol. 31(4), pages 465-472.
  • Handle: RePEc:taf:applec:v:31:y:1999:i:4:p:465-472
    DOI: 10.1080/000368499324174

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    Cited by:

    1. Muhammad Wasif Siddiqi & Amjad Ali & Muhammad Irfan Chani, 2014. "Import Demand, Economic Development and Trade Liberalization in Pakistan: An Empirical Analysis," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 3(2), pages 131-141, June.
    2. Tsangyao Chang & Yuan-Hong Ho & Chiung-Ju Huang, 2005. "A Reexamination Of South Korea¡¯S Aggregate Import Demand Function: The Bounds Test Analysis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(1), pages 119-128, June.
    3. Tang, Tuck Cheong, 2003. "An empirical analysis of China's aggregate import demand function," China Economic Review, Elsevier, vol. 14(2), pages 142-163.
    4. Khurram Ashfaq Baluch & Syed Kalim Hyder Bukhari, 2012. "Price and Income Elasticity of Imports: The Case of Pakistan," Working Papers id:4899, eSocialSciences.
    5. Umar, Haruna Suleiman & Amin Mahir Abdullah & Mad Nasir Shamsudin & Zainal Abidin Mohamed, 2014. "Time series econometric estimation of supply equation for Malaysian rice sector," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 4(9), pages 455-467, September.
    6. Dilip Dutta & Nasiruddin Ahmed, 2004. "Trade liberalization and industrial growth in Pakistan: a cointegration analysis," Applied Economics, Taylor & Francis Journals, vol. 36(13), pages 1421-1429.
    7. Barns, Jeremy R., 2004. "Toward Understanding Philippine Trade in Services: A Demand Approach," Philippine Journal of Development PJD 2003 Vol. XXX No. 1-e, Philippine Institute for Development Studies.
    8. Abdul, waheed & Syed tehseen, jawaid, 2010. "Inward foreign direct investment and aggregate imports: time series evidence from Pakistan," MPRA Paper 31270, University Library of Munich, Germany.
    9. Dilip Dutta & Nasiruddin Ahmed, 2004. "An aggregate import demand function for India: a cointegration analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 11(10), pages 607-613.
    10. Yoichi Matsubayashi & Shigeyuki Hamori, 2009. "Empirical analysis of import demand behavior of least developed countries," Economics Bulletin, AccessEcon, vol. 29(2), pages 1443-1458.
    11. Estefanía Mourelle & José Cancelo, 2009. "Nonlinearities and the Business Cycle in Spanish Imports: A Smooth Transition Regression Approach," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 15(2), pages 245-259, May.
    12. Tuck Cheong Tang, 2002. "Aggregate Import Demand Behavior For Indonesia: Evidence From The Bounds Testing Approach," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 10(2), pages 179-199, December.
    13. Tahir Mukhtar, 2010. "Does Trade Openness Reduce Inflation? Empirical Evidence from Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(2), pages 35-50, Jul-Dec.
    14. Ahad, Muhammad, 2016. "A Dynamic Relationship Between Financial Development and Import Demand for Bangladesh: An Evidence from Combine Cointegration and Granger Causality approach," MPRA Paper 71963, University Library of Munich, Germany, revised 09 May 2016.
    15. Paul Mwebaze & Jim Monaghan & Nicola Spence & Alan MacLeod & Martin Hare & Brian Revell, 2010. "Modelling the Risks Associated with the Increased Importation of Fresh Produce from Emerging Supply Sources Outside the EU to the UK," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(1), pages 97-121.
    16. Muhammad Irfan CHANI & Zahid PERVAIZ & Amatul R. CHAUDHARY, 2011. "Determination of Import Demand in Pakistan: The Role of Expenditure Components," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(8(561)), pages 93-110, August.
    17. M. Adetunji Babatunde & Festus O. Egwaikhide, 2010. "Explaining Nigeria's import demand behaviour: a bound testing approach," International Journal of Development Issues, Emerald Group Publishing, vol. 9(2), pages 167-187, July.
    18. Arize, Augustine C. & Nippani, Srinivas, 2010. "Import demand behavior in Africa: Some new evidence," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(3), pages 254-263, August.
    19. repec:kap:iaecre:v:15:y:2009:i:2:p:245-259 is not listed on IDEAS
    20. Vesile Kutlu & Nese Kavrukkoca, 2007. "Evaluating the Maastricht Convergence Criteria for New Prospective European Union Members," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 7(1), pages 13-26.

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