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Modelling the Demand for Imports and Domestic Output

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Abstract

The paper models domestic output over imports in Norway's expenditure on manufactures. Using Johansen's (1988, 1991) method, we obtain a cointegrating vector between the output-imports ratio, relative prices and a proxy for international specialisation. This vector enters a conditional equilibrium correction model of the output-imports ratio; a model which also includes short-run influences of relative prices and a negative coefficient for domestic capacity utilisation. The utilisation coefficient aside, we do not find significant activity effects on the output-imports ratio. Lastly, the model passes several tests of the Lucas critique.

Suggested Citation

  • Bjørn E. Naug, 1999. "Modelling the Demand for Imports and Domestic Output," Discussion Papers 243, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:243
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    File URL: http://www.ssb.no/a/publikasjoner/pdf/DP/dp243.pdf
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    References listed on IDEAS

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    1. Gregory, R G, 1971. "United States Imports and Internal Pressure of Demand: 1948-68," American Economic Review, American Economic Association, vol. 61(1), pages 28-47, March.
    2. Gagnon, Joseph E., 1989. "Adjustment costs and international trade dynamics," Journal of International Economics, Elsevier, vol. 26(3-4), pages 327-344, May.
    3. Gerrard, W J & Godfrey, L G, 1998. "Diagnostic Checks for Single-Equation Error-Correction and Autoregressive Distributed Lag Models," The Manchester School of Economic & Social Studies, University of Manchester, vol. 66(2), pages 222-237, March.
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    More about this item

    Keywords

    Import share; international specialisation; cointegration; Johansen procedure; equilibrium correction model; parameter constancy; Lucas critique.;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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