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How Do Foreign and Domestic Demand Affect Exports Performance? An Econometric Investigation of Indonesia's Exports

Listed author(s):
  • Rudy Rahmaddi

    (Graduate School for International Development and Cooperation, Hiroshima University)

  • Masaru Ichihashi

    (Graduate School for International Development and Cooperation, Hiroshima University)

This paper explores the impacts of foreign and domestic demand on Indonesia's exports within demand and supply frameworks using aggregate data of 1971 - 2007. To capture effects of secular and cyclical movements on exports, we dissect income variables into trend and business cycle as proxies of productive capacity and capacity utilization rate, respectively. Our result suggests that both demand- and supply-price elasticity are elastic, and secular and cyclical movements may have contrast effects on exports. The findings draw policy implications namely the importance of price-based policy, provision of adequate and sound infrastructures, and further development of human capital-based industrialization.

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File URL: http://ir.lib.hiroshima-u.ac.jp/metadb/up/ZZT00001/IDEC-DP2_01-4.pdf
File Function: First version, 2011
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File URL: http://ir.lib.hiroshima-u.ac.jp/files/public/31690/20141016182313148602/IDEC-DP2_01-4R.pdf
File Function: Revised version, 2012
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Paper provided by Hiroshima University, Graduate School for International Development and Cooperation (IDEC) in its series IDEC DP2 Series with number 1-4.

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Length: 28 pages
Date of creation: Sep 2011
Date of revision: Jan 2012
Publication status: Published in Modern Economy, Vol.3 No.1, January 2012, Pages 32-42
Handle: RePEc:hir:idecdp:1-4
Contact details of provider: Web page: http://www.hiroshima-u.ac.jp/en/idec/

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  23. Koshal, Rajindar K. & Shukla, Vishwa S. & Koirala, Govinda P., 1992. "Demand and supply of Indian exports: A simultaneous equation approach," Journal of Asian Economics, Elsevier, vol. 3(1), pages 73-83.
  24. Khan, Mohsin S & Knight, Malcolm D, 1988. "Import Compression and Export Performance in Developing Countries," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 315-321, May.
  25. Murray, Tracy & Ginman, Peter J, 1976. "An Empirical Examination of the Traditional Aggregate Import Demand Model," The Review of Economics and Statistics, MIT Press, vol. 58(1), pages 75-80, February.
  26. Farley, John U. & Hinich, Melvin & McGuire, Timothy W., 1975. "Some comparisons of tests for a shift in the slopes of a multivariate linear time series model," Journal of Econometrics, Elsevier, vol. 3(3), pages 297-318, August.
  27. Haynes, Stephen E & Stone, Joe A, 1983. "Secular and Cyclical Responses of U.S. Trade to Income: An Evaluation of Traditional Models," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 87-95, February.
  28. Houthakker, Hendrik S & Magee, Stephen P, 1969. "Income and Price Elasticities in World Trade," The Review of Economics and Statistics, MIT Press, vol. 51(2), pages 111-125, May.
  29. Jean-Philippe Cotis & Jonathan Coppel, 2005. "Business Cycle Dynamics in OECD Countries: Evidence, Causes and Policy Implications," RBA Annual Conference Volume, in: Christopher Kent & David Norman (ed.), The Changing Nature of the Business Cycle Reserve Bank of Australia.
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