Estimating Import-Demand Function in ARDL Framework
We develop a structural econometric model of import demand for Pakistan, with binding foreign exchange constraint. ARDL and DOLS techniques are used to estimate the log-run coefficients of price and income elasticities. The empirical results from ARDL bound testing approach and Johansen’s method for cointegration show strong evidence of the existence of a long-run stable relationship among the variables included in the import demand model. The price and income elasticity estimates have correct signs and are statistically significant. The coefficient of scarcity premium, as it appeared statistically significant with correct sign, confirms the presence of a binding foreign exchange constraint on aggregate import demand, particularly before the period of trade liberalization.
|Date of creation:||15 Aug 2010|
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- Erkel-Rousse, H. & Mirza, D., 2000.
"Import Price-Elasticities : Reconsidering the Evidence,"
Papiers d'Economie MathÃ©matique et Applications
2000.52, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
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- Helene Erkel-Rousse & Daniel Mirza, 2000. "Import Price-Elastcities: Reconsidering the Evidence," Econometric Society World Congress 2000 Contributed Papers 0909, Econometric Society.
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- Johansen, Søren, 1995.
"A Stastistical Analysis of Cointegration for I(2) Variables,"
Cambridge University Press, vol. 11(01), pages 25-59, February.
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- Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107, March.
- Narayan, Paresh Kumar & Narayan, Seema, 2005. "Estimating income and price elasticities of imports for Fiji in a cointegration framework," Economic Modelling, Elsevier, vol. 22(3), pages 423-438, May.
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