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Disaggregated Import Demand Function: A Case Study of Pakistan

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  • Ali, Amjad
  • Irfan Chani, Muhammad

Abstract

This study investigates the income and price elasticities of disaggregated import demand function in case of Pakistan. This paper applies the ARDL bound testing approach to co-integration over the time span of 1972-2009. Our empirical findings show that there exists a long run relationship among the variables. The impact on real GDP on import demand of food items is positive. The impact on real GDP on import demand of raw material is positive. The effect of real GDP on import demand of fuel lightening and the lubricants items group is positive. The impact of relative price on import demand of fuel lightening and the lubricants items group is negative. The effect of real GDP on import demand of manufactured items group is positive, but the impact of relative price is negative. Fuel lightening and lubricants items and manufactured items are highly price elastic, while food items and raw material items are price inelastic. The overall results of all the four models indicate that fuel lightening and lubricants items group is more income elastic as compared to the other commodity groups, and the manufactured items group is more price elastic as compared to the other commodity groups. This study also confirms that import demand of all the commodity groups is highly sensitive to changes in real GDP. The government should try to invest in high-tech industry so that in long run imported goods demand may be controlled.

Suggested Citation

  • Ali, Amjad & Irfan Chani, Muhammad, 2012. "Disaggregated Import Demand Function: A Case Study of Pakistan," MPRA Paper 95674, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:95674
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    References listed on IDEAS

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    Cited by:

    1. Olabisi Olabode Eric, 2015. "Trade Liberalization and Economic Growth in Nigeria: Do Concern Matters?," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(6), pages 306-311, June.
    2. Ahmad, Khalil & Ali, Amjad, 2019. "The Effect of Trade Liberalization on Expenditure Structure of Pakistan," MPRA Paper 95665, University Library of Munich, Germany.
    3. 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.
    4. Ahmad, Khalil & Ali, Safdar & Ali, Amjad, 2018. "Trade Revenue Implications of Trade Liberalization in Pakistan," MPRA Paper 87529, University Library of Munich, Germany.
    5. Sonia Liaqat & Muhammad Irfan Chani, 2018. "The Impact of Exports Diversification on Economic Growth: Evidence from Pakistan," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 7(4), pages 156-168, December.
    6. Moqeet Ahmed & Ahmed Imran Hunjra & Muhammad Kashif Iqbal & Jibran Khalil, 2014. "Impact of Foreign Direct Investment, Imports, Exports of Goods and Services on Economic Growth of Pakistan," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 3(3), pages 155-165, September.
    7. Zeshan Arshad & Saba Mukhtar & Amina Bibi & Azeema Zia, 2015. "Imports and Exports of Pakistan Time Series (1970-2013)," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(10), pages 473-478, October.

    More about this item

    Keywords

    Demand Function; ARDL bounds testing; Pakistan;

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • F10 - International Economics - - Trade - - - General

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