Abstract
The theme of the study was to estimate the elasticity of aggregated and selected disaggregated
import demand function with relative prices and income for Pakistan from 1982 to 2011 on
annual data. The most effective estimation tool was used (Auto-regressive Distributed Lag
ARDL) by employing the Bounds Test method and Error Correction Modeling (ECM)
techniques. The Un-restricted Error Correction Model (UECM) ARDL to calculate the long
run elasticity of import while the short term dynamics is estimated through restricted ECM.
In this research, aggregated import demand and disaggregated import demand commodities
groups were made. Petroleum, Chemical, Manufacturing Goods and Machinery and Transport
Groups are response variables whereas Gross Domestic Product (GDP) and Relative Prices
variables are treated as explanatory variables. The disaggregated analysis of above mentioned
various commodities groups are conducted in order to identify the fundamental drivers of
import demand and to design fiscal and economic policy accordingly. The results indicated
that at aggregated level, import demand with respective relative prices is elastic whereas it
is inelastic with income in the long run. At disaggregated level, import demand with relative
prices of machinery and transport group is elastic only while it is inelastic with income level
in all selected disaggregated imports demand in long run. Furthermore, all import demand
models are statistically significant having expected association and are stable in long run.
In sort run aggregate import demand, petroleum and chemical groups are statistically
significant while manufacturing goods, machinery and transport groups are insignificant.
Furthermore all alternate hypotheses were accepted.
Imran Ullah Khan Marwat. (2015) Estimated Import Demand Funcation For Pakistan: A Disaggregated Analysis, Journal of Independent Studies and Research-Management, Social Sciences and Economics, Volume-13, Issue-1.
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