Inequality and the import demand function

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. In this paper we build a model of trade in vertically differentiated products and find that income inequality can affect the demand for imports even in the presence of homothetic preferences. The empirical importance of changes in inequality on the demand for imports is then assessed by examining panel data for 36 developing and developed countries for the 1980-1997 period. We find significant evidence supporting our prediction that inequality has a large influence on the demand for imports. Moreover we find that, in line with the predictions of our theoretical model, this influence is positive for high-income countries (countries that produce the high quality variety of the vertically differentiated product) and negative for low-income countries (countries that produce the low quality variety of the vertically differentiated product). Terms of use: Documents in EconStor mayJEL Code: F13, H23, O24.

Financial Development and Estimation of Import Demand Function in Pakistan: Evidence from Combined Cointegration and Causality Tests

“…The estimated results indicated that volume of imports, domestic real activity and relative prices are not integrated. Adam, Katsimi and Moutos (2012) obtained data of 36 countries to examine the validity of import demand function in the presence of income inequality and concluded that income inequality impacts import demand. Income inequality increases the import demand in high-income countries but decreases it in low-income countries.…”

Global current account imbalances and the link between income and consumption inequality

“…It is necessary to discuss further the effects on current accounts of income inequality and demographic structure. Although plenty of the literature attempts to clarify the influence of trade on inequality, only a few studies have recently emerged to explore the opposite chain of causality: the impact of inequality on trade (Adam et al., 2012; Zweimüller et al, 2018). Our estimation intends to generate some insights into potential links running from income inequality to the strategy of export‐for‐growth in surplus countries (reflected by Z ↑) and to the practice of import‐for‐spending in deficit countries (embodied by X ↑ and Z ↓).…”

Institutional ownership and return volatility in the casino industry

“…Thus, there could be endogeneity between institutional ownership and stock volatility, and an instrumental variable treatment is thus required to handle this potential problem. For this purpose and following the literature, this paper simply uses the lagged value of a suspected endogenous regressor in a random effects world (Adam, Katsimi, & Moutos, ). To check the robustness of the results, an HT estimator is used as an instrumental variable technique, which includes both the between and within variations of strictly exogenous variables as instruments for the time‐invariant regressors that are correlated with individual effects (Baltagi, Bresson, & Pirotte, ).…”

“…potential problem. For this purpose and following the literature, this paper simply uses the lagged value of a suspected endogenous regressor in a random effects world (Adam, Katsimi, & Moutos, 2012 1) shows that multicollinearity is not a serious problem in the data.…”