Revisiting the Import Demand Function: A Comparative Analysis
  • /
  • Revisiting the Import Demand Function: A Comparative Analysis

Revisiting the Import Demand Function: A Comparative Analysis

Authors

  • Sharif Hossain Professor of Econometrics, Faculty of Business Studies, University of Dhaka, Dhaka, Bangladesh
  • Kanon Kumar Sen Lecturer at department of Accounting and Information Systems, Bangladesh University of Professionals, Bangladesh
  • Thasinul Abedin Assistant Professor of Accounting, University of Chittagong, Bangladesh
  • Muhammad Shafiur Rahman Chowduhury Assistant Professor at the Department of Accounting in University of Chittagong, Bangladesh

DOI:

https://doi.org/10.12775/DEM.2019.001

Keywords

Exchange Rate, Import Demand Function, Real GDP, Relative Price

Abstract

This study attempts to revisit import demand function across three panels of frontier, emerging, and developed economy from 1980 to 2016. Long-run relationship exists among import demand, relative price, exchange rate, and real GDP in economy. Due to increase in real GDP, import demand responds positively across economies. It responds in same direction in short-run in frontier and emerging economies with relative price unlike that of long-run in same economies. However, it responds in same direction with relative price in developed economy. It moves in opposite direction with respect to movement in exchange rate of frontier economy unlike that of developed economy. Next, the behavior of import demand in short-run due to change in exchange rate varies from that of long-run in emerging economy. This study will help to predict the dynamics of import due to change in income level, relative price, and exchange rate at national and international level.

Author Biographies

Sharif Hossain, Professor of Econometrics, Faculty of Business Studies, University of Dhaka, Dhaka, Bangladesh

Dr. Md. Sharif Hossain is a Professor of Econometrics at Department of Accounting & Information Systems, University of Dhaka, Bangladesh. Previously, he was associate professor at Department of Economic Engineering, Kyushu University, Japan and Assistant professor at Department of Economics, KIMEP, Kazakhstan. He is experienced at Econometrics, Microeconomics, Macroeconomics, Mathematical Economics, Quantitative Methods in Economics, and so on. He has more than 58 research publications in recognized journals including Elsevier, Springer, Sage, and Economics Bulletin. He also achieved the best paper award certificate from The International Business and Economic Research Conference, Las Vegas, USA on October 2002.

Kanon Kumar Sen, Lecturer at department of Accounting and Information Systems, Bangladesh University of Professionals, Bangladesh

Mr. Kanon Kumar Sen works as a Lecturer in the Department of Accounting and Information Systems at Bangladesh University of Professionals. He has more than 5 papers in recognized journals including Asian Journal of Accounting Perspectives, International Journal of Happiness and Development, and Bangladesh Institute of Bank Management.

Thasinul Abedin, Assistant Professor of Accounting, University of Chittagong, Bangladesh

:  Mr. Md. Thasinul Abedin is an assistant professor in the Department of Accounting at University of Chittagong, Bangladesh. Before that he has worked in Bangladesh Institute of Bank Management and Notre Dame University Bangladesh as a Lecturer. He has more than ten papers in recognized journals including Economics Bulletin and Asian Journal of Accounting Perspectives. He has received the second best paper award at the 1st International Conference on Business and Economics held at Faculty of Business Studies, University of Dhaka.

Muhammad Shafiur Rahman Chowduhury, Assistant Professor at the Department of Accounting in University of Chittagong, Bangladesh

Muhammad Shafiur Rahman Chowduhury is Assistant Professor at the Department of Accounting in University of Chittagong, Bangladesh.

References

Abbott, A.J. Seddighi, H.R. (1996). Aggregate Imports and Expenditure Components in the UK: An Empirical Analysis. Applied Economics, 28, 1119–1125. http://dx.doi.org/10.1080/000368496327967

Adam, A., Katsimi, M., Moutos, T. (2008). Inequality and the Import Demand Function CESifo. Working Paper No.2196, Category 6: Monetary Policy and International Finance, January 2008.

Afzal, M. (2001). Exports in a Simultaneous Model: The Case of Pakistan. Government College, Economic Journal, 34(1&2), 53–66.

Ahad, M., Afza, T., Shahbaz, M. (2017). Financial Development and Estimation of Import Demand Function in Pakistan: Evidence from Combined Cointegration and Causality Tests. Global Business Review, 18(1), 1–14. http://dx.doi.org/10.1177/0972150916666909

Anyemedu, K. (1995). The Effects of Trade Liberalization on Industry and Labour in Ghana, the Friedrich Ebert Foundation. Accra, Ghana.

Arize, A. C., Malindretos, J. (2012). Foreign Exchange Reserve in Asia and its Impact on Import Demand. International Journal of Economics and Finance, 4(3), 21–32. http://dx.doi.org/10.5539/ijef.v4n3p21

Bahmani-Oskooee, M. (1986). Determinants of International Trade Flows: The Case of Developing Countries. Journal of Development Economics, 20(1), 107–123.

Bahmani-Oskooee, M., Niroomand, F. (1998). Long-run Price Elasticities and the Mar-shall-Lerner Condition Revisited. Economics Letters, 61(1), 101–109. http://dx.doi.org/10.1016/S0165-1765(98)00147-5

Bahmani-Oskooee, M., Kara, O. (2003). Relative Responsiveness of Trade Flows to a Change in Price and Exchange Rate. International Review of Applied Economics, 17(3), 293–308. http://dx.doi.org/10.1080/0269217032000090496

Bahmani-Oskooee, M., Kara, O. (2005). Income and Price Elasticities of Trade: Some New Estimates, The International Trade Journal, 19(2), 165–178. http://dx.doi.org/10.1080/08853900590933125

Chang, T., Ho, Y.H., Huang, C. (2005). A Reexamination of South Korea’s Aggregate Import Demand Functions: The Bounds Test Analysis. Journal of Economic Development, 30(1), 119–128.

Choi, I. (2006). Nonstationary Panels. Chapter 13 in T.C. Mills and K. Patterson (eds.), Palgrave Handbooks of Econometrics, 1, 511–539, Palgrave, Macmillan.

Dutta, D., Ahmed, N. (1999). An Aggregate Import Demand Function for Bangladesh: A Cointegration Approach. Applied Economics, 31, 465–72. http://dx.doi.org/10.1080/000368499324174

Dutta, D., Ahmed, N. (2004). An Aggregate Import Demand Function for India: A Cointegration Analysis. Applied Economics Letters, 11, 607–13. http://dx.doi.org/10.1080/1350455042000271134

Egwaikhide, F.O. (1999). Determinants of Imports in Nigeria: A Dynamic Specification. Department of Economics, University of Ibadan, Nigeria. AERC Research Paper 91.

Engle, R.F., Granger, C.W.J. (1987). Cointegration and Error Correction: Representation, Estimation and Testing. Econometrica, 55, 251–276.

Erlat, G., Erlat, H. (1991). An Empirical Study of Turkish Export and Import Functions. CBRT and METU.

Ghorbani, M., Motallebi, M. (2009). Application of Pesaran and Shin Method for Esti-mating Irans’ Import Demand Function. Journal of Applied Sciences, 9(6), 1175–1179. http://dx.doi.org/10.3923/jas.2009.1175.1179

Giovannetti, G. (1989). Aggregated Imports and Expenditure Components in Italy: An Econometric Analysis, Applied Economics, 21, 303–313.Hardi, K. (2000)., Test-ing for Stationarity in Heterogeneous Panel data. The Econometrics Journal, 3(2), 148–161, https://doi.org/10.1111/1368-423X.00043

Hibbert, K., Thaver, R., Hutchinson, M. (2012). An Econometric Analysis of Jamaica’s Import Demand Functions with the US and UK. The International Journal of Business and Finance Research, 6(1), 109–120.

Houthakker, H.S., Magee, S.P. (1969). Income and Price Elasticities in World Trade. Review of Economics and Statistics, 21(2), 111–125.

Hye, Q.M., Mashkoor, M. (2010). Import Demand Functions for Bangladesh: A Rolling Window Analysis. African Journal of Business Management, 4(10), 2150–2156.

Ibrahim, M. A. (2015). Merchandise Import Demand Function in Saudi Arabia. Applied Economics and Finance, 2(1), 55–65. http://dx.doi.org/10.11114/aef.v2i1.626

Ibrahim, M.A. (2017). An Examination of Merchandise Imports Demand Function for Egypt. Applied Economics and Finance, 4(2), 101–112. http://dx.doi.org/10.11114/aef.v4i2.1969

Im, K.S., Peasaran, M.H., Shin, Y. (2003). Testing for Unit Roots in Heterogeneous Pan-els. Journal of Econometrics, Vol. 115, pp. 53–74.

http://dx.doi.org/10.1016/S0304-4076(03)00092-7

Islam, A.M., Hassan, M.K. (2004). An Econometric Estimation of the Aggregate Import Demand Function for Bangladesh: Some Further Results. Applied Economics Letters, 11, 575–580. http://dx.doi.org/10.1080/1350485042000217990

Johansen, S. (1988). Statistical Analysis of Cointegration Vectors. Journal of Economic and Control, 12, 231‐254. http://dx.doi.org/10.1016/0165-1889(88)90041-3

Johansen, S. (1995). Likelihood–Based Inference in Cointegrated Vector Autoregressive Models. Oxford, Oxford University Press. http://dx.doi.org/10.1093/0198774508.001.0001

Junz, H.B., Rhomberg, R.R. (1973). Price Competitiveness in Export Trade Among Indus-trial Countries. The American Economic Review, 63, 412–418.

Kao, C. (1999). Spurious Regression and Residual-Based Tests for Cointegration in Panel Data. Journal of Econometrics, 90,1–44.

http://dx.doi.org/10.1016/S0304-4076(98)00023-2

Katsimi, M., Moutos, T. (2011). Inequality and the US Import Demand Function. Journal of International Money and Finance, 30(11), 492–506.

Kotan Z., Saygılı M. (1999). Estimating an Import Demand Functions for Turkey. The Central Bank of the Republic of Turkey Research Department, Discussion Paper No: 9909.

Kreinin, M.E. (1973). Disaggregated Import Demand Functions – Further Results. South-ern Economic Journal, 40, 19–25.

Min, B.S., Mohammad, H.A., Tang, T.C. (2002). An Analysis of South Korea’s Import Demand. Journal of Asia-Pacific Affairs, 4, 1–17.

Mishra, B.R., Mohanty, A. (2017). An Empirical Analysis of Aggregate Import Demand Function for India. Global Economy Journal, 17(4), 1–11.

http://dx.doi.org/10.1515/gej-2017-0049

Mohammad, H.A., Tang, T.C. (2000). Aggregate Imports and Expenditure Components in Malaysia: A Cointegration and Error Correction Analysis. ASEAN Economic Bulletin, 17, 257–269.

MSCI (2019). MSCI 2019 Annual Market Classification Review. Retrieved from https://www.msci.com/market–classification.

Mwega, F.M. (1993). Import Demand Elasticities and Stability during Trade Liberalization: A Case Study of Kenya. Journal of African Economies, 2, 381–416. http://dx.doi.org/10.1093/oxfordjournals.jae.a036790

Narayan, S., Narayan, K. (2005). An Empirical Analysis of Fiji's Import Demand Functions. Journal of Economic Studies, 32(2), 158–168. http://dx.doi.org/10.1108/01443580510600931

Omotor, D. (2010). An Aggregate Import Demand Functions for Nigeria. Economic Research, 23(1), 1–14. http://dx.doi.org/10.1080/1331677X.2010.11517397

Orcutt, G.H. (1950). Measurement of Price Elasticities in International Trade. Review of Economics and Statistics, 32(2),117–132. http://dx.doi.org/10.2307/1927649

Rana, P. (1983). The Impact of Generalized Floating on Trade Flows and Reserve Needs: Selected Asian Developing Countries. New York: Garland Publishers.

Rehman, H. U. (2007). An Econometric Estimation of Traditional Import Demand Function for Pakistan. Pakistan Economic and Social Review, 45 (2), 245–256.

Sinha, D. (1997). Determinants of Import Demand in Thailand. International Economic Journal, 11, 73–83. http://dx.doi.org/10.1080/10168739700000027

Stock, J.H., Watson, M.W. (1993). A Simple Estimator of Cointegrating Vectors in High-er Order Integrated Systems. Econometrica, 61, 783–820. http://dx.doi.org/10.2307/2951763

Tang, T.C. (2003). An Empirical Analysis of China's Aggregate Import Demand Functions. China Economic Review, 14(2), 142–163. http://dx.doi.org/10.1016/S1043-951X(03)00021-X

Tang, T.C. (2005). A Reassessment of Aggregate Import Demand Function in the ASEAN-5: A Cointegration Analysis. The International Trade Journal, 18, 239–268.

Thaver, R., Ekanayake, E.M. (2010). The Impact of Apartheid and International Sanctu-ions on South Africa's Import Demand Function: An Empirical Analysis. International Journal of Business and Finance Research, 4(4), 11–22.

Warner, D., Kreinin, M.E. (1983). Determinants of International Trade Flows. The Review of Economics and Statistics, 65, 96–104.

Wilson, J. Takacs, W. (1979). Differential Responses to Price and Exchange Rate Influences in the Foreign Trade of Selected Industrial Countries. The Review of Economics and Statistics, 61, 267–279. http://dx.doi.org/10.2307/1924595

Yin, F., Hamori, S. (2011). Estimating Import Demand Function in the Autoregressive Distributed Lag Framework: The Case of China. Economics Bulletin, 31(2), 1576–1591.

Downloads

Published

2019-12-28

How to Cite

1.
HOSSAIN, Sharif, SEN, Kanon Kumar, ABEDIN, Thasinul & CHOWDUHURY, Muhammad Shafiur Rahman. Revisiting the Import Demand Function: A Comparative Analysis. Dynamic Econometric Models [online]. 28 December 2019, T. 19, s. 5−27. [accessed 27.11.2021]. DOI 10.12775/DEM.2019.001.

Issue

Vol. 19 (2019)

Section

Articles

License

The journal provides an Open Access to its content based on the non-exclusive licence Creative Commons (CC BY-ND 4.0).

To enable the publisher to disseminate the author's work to the fullest extent, the author must agrees to the terms and conditions of the License Agreement with Nicolaus Copernicus University.

Stats

Number of views and downloads: 96
Number of citations: 0