Long–run price and income elasticities of demand for Hong Kong exports: a structural cointegrating VAR approach

Abbott, Andrew James; Vita, Glauco De

doi:10.1080/00036840110514

Cited by 33 publications

(3 citation statements)

References 19 publications

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“…The domestically produced goods and imported foreign goods are assumed to be imperfect substitutes of each other in this model. Under the imperfect substitute model, the exports demand is assumed to be depending on the relative prices and income levels of the trading partners [Lundborg (1981); Goldstein and Khan (1978) and Abbott and Vita (2002)]. The textile and clothing exports demand is specified in log linear functional form as: Khan (1994); Malik (2000); Atique and Ahmed (2003); Ahmed (2000); Roy (2009)].…”

Section: Methodology and Datamentioning

confidence: 99%

The Determinants of Pakistan Exports of Textile: An Integrated Demand and Supply Approach

Latif¹,

Javid²

2022

pdr

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The determinants of demand and supply of textile and clothing exports of Pakistan are examined for seven major trading partners (US, UK, Canada, Italy, France, Japan and Spain) over the period 1972 to 2013. The simultaneous equation model is estimated by Generalised Method of Moment to handle simultaneous equation bias and for consistent and more precise estimates classical Empirical Bayes technique is applied. The results reveal that income of trading partners and devaluation policy has important and significant role in explaining exports performance of textile and clothing of Pakistan. As regards the supply side, the relative prices and capacity variable are important in determining the textile and clothing exports, however, the real wages have significant but small effect on textile and clothing exports supply. The removal of quantitative restrictions fails to provide incentives to the suppliers. The high income elasticity for the demand suggests that focus should be on raising the factors which can help in expansion of textile and clothing products in local market and marked countries. Keywords: Textile and Clothing Exports of Pakistan, Simultaneous Equations, Real Effective Exchange Rate, Agreement on Textile and Clothing

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Section: Methodology and Datamentioning

confidence: 99%

The Determinants of Pakistan Exports of Textile: An Integrated Demand and Supply Approach

Latif¹,

Javid²

2022

pdr

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“…In recent years, many developing countries have diverted from import substitution policies to export-led policies. This has been strongly due to the development of the Asian tigers and the actual economic expansion of China (Abbot and De Vita, 2002).…”

Section: Review Of Previous Studiesmentioning

confidence: 99%

An Application of Thirlwall's Model to Botswana's Economic Growth

P.N¹,

G.R.²,

Kahaka³

2022

IJAEB

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This paper estimates economic growth of Botswana using Thirlwall's and the Extended Thirlwall's models for the period of 1980-2016. Parameters from the Thirlwall's model shows the calculated growth rate of 5.63 percent while the actual growth rate was 6.52%. These growth rates are very close to each other. This indicates that price and income elasticities of exports and imports influence Botswana's economic growth. Our empirical findings support those of Matsheka (1998). These empirical findings suggest that the Thirlwall's law holds in Botswana. i.e., Botswana's economic growth rate is balance of payments constrained. The Extended Thirlwall's model showed lower growth rate of 4.26% which is less than the actual growth rate. This suggested that the productivity factor has not played a significant role in the economic growth of Botswana. This might not be surprising. Botswana's economic growth is driven by the growth of diamonds exports where productivity might not be easily measured like in the manufacturing and services industries. These findings are in contrast to those of Romero and McCombie (2016) when investigating the impact of relative productivity growth on trade performance on developed countries. It is recommended that Botswana should improve her exports diversification strategies to increase economic growth without deteriorating her balance of payments

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“…Following Rao and Singh (2007), this could result in obtaining bias income and price elasticities. Studies that support the inclusion of exchange rate in the relative price variable are Kumar (2009c, b), Nowak-Lehmann (2004), Abbott and De Vista (2002) and Muscatelli et al (1995). Marquez and McNeilly (1988) argue that both income and price elasticities are useful in the determination of trade flows for advanced and developing countries.…”

Section: Introductionmentioning

confidence: 99%

Estimating export demand equations in selected Asian countries

Kumar

2011

Journal of Chinese Economic and Foreign Trade Studies

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Purpose -The purpose of this paper is to utilize the new specification proposed by Rao and Singh to estimate export demand equations for Asian developing countries, viz. India, China, The Philippines, Indonesia, Singapore and Malaysia. In this specification of export demand, exchange rate is included in the relative price variable. Design/methodology/approach -The augmented Dicky-Fuller method is applied to test the time-series properties of the variables. The time-series techniques of Phillip-Hansen's fully modified ordinary least squares and Johansen's maximum likelihood are used with annual data from 1970 to 2007. The Granger causality test determines the causality direction between income, relative prices and exports. Findings -The paper confirms that there exists a long-run cointegrating relationship between real exports, real income of trading partners and relative prices. The long-run income elasticities range between 1 and 1.3 and the relative price elasticities range between 21 and 21.4. Our Granger causality results imply that in the long-run income and relative prices Granger cause exports in these countries. Research limitations/implications -Structural breaks and trade shock analysis were ignored. Practical implications -The results imply that exports should be treated as an engine of growth in the Asian developing countries and the export promotion policies such as subsidies, special credits and tax concessions should be encouraged. The relative price elasticities imply that exports are competitive in the international market and these countries have the option to devalue their currency to enhance export earnings. Although the real devaluation of the currencies will push import costs high, eventually this motivates the local firms to undertake alternative options, for instance, import substitution. Further, the gains resulting from the export growth policies will be attractive. Originality/value -The paper assesses the magnitudes of export elasticities with a specification that includes exchange rate in relative price variable.

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Long–run price and income elasticities of demand for Hong Kong exports: a structural cointegrating VAR approach

Cited by 33 publications

References 19 publications

The Determinants of Pakistan Exports of Textile: An Integrated Demand and Supply Approach

The Determinants of Pakistan Exports of Textile: An Integrated Demand and Supply Approach

An Application of Thirlwall's Model to Botswana's Economic Growth

Estimating export demand equations in selected Asian countries

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