Some international evidence on the stability of aggregate import demand function

Abstract

This paper empirically analyses the stability of the aggregate import demand function for G7 countries. The standard cointegration test and a test developed by Gregory and Hansen are performed. The results of standard cointegration tests suggest that there is no stable cointegrating relation between real import, real GDP and relative import price for all G7 countries. The cointegrating relation is empirically supported for France and Germany if structural change for cointegrating vector is explicitly taken into consideration. The cointegrating relation is empirically rejected for Canada, Italy, Japan, the UK and the USA. Thus, the stimulation of domestic business conditions will not necessarily link the quantity of imports for these five countries.

Investigating the Impact of Exchange Rate Volatility, Inflation and Economic Output on International Trade of India

“…According to the microeconomic theory, conventional demand functions are homogeneous degree zero in terms of price and income (Deaton & Muellbauer, 1980). Studies by Ekanayake et al (2010), Gafar (1995), Matsubayashi and Hamori (2003) and Salas (1982) have taken income and prices as two important explanatory variables of demand. Therefore, international demand function should comprise a proxy of income of an economy or production in an economy for which GDP is the obvious choice as according to the circular flow of income, GDP = income = production = spending but its official estimates are typically only available on a quarterly basis, whereas index of industrial production (IIP) is a monthly statistic.…”

The Impact of Exchange Rate Volatility on Exports in Vietnam: A Bounds Testing Approach

“…According to the microeconomic theory, conventional demand functions are homogenous degree zero in terms of price and income (Deaton and Muellbauer 1980). To examine the impact of exchange rate volatility on exports, this study adds an exchange rate volatility variable to the traditional export demand function comprising consumers' income (or GDP) and relative price, which has been used in many previous studies such as Salas (1982); Gafar (1995); Matsubayashi and Hamori (2003); Ekanayake et al (2010). The model is specified as follows:…”

Demand for Imports and Components of Final Expenditure: An Empirical Study with Special Reference to the Korean Import Demand Function

“…Studies have been conducted on the basis of both multi-country comparison and country-specific investigation. For multi-country examinations, there are Asseery and Peel (1991) for five developed economies, Bahmani-Oskooee (1998) for six less developed nations, Sinha (2001) for five nations in Asia, Alias et al (2001) for five ASEAN countries, and Matsubayashi and Hamori (2003) for G7 member countries. Examples of country-specific investigation, to name a few among many, include Salas (1982) for the Mexico, Doroodian et al (1994) for Saudi Arabia, Abbott and Seddighi (1996) for the UK, Carone (1996) for the US, Sinha (1997) and Ahad et al (2017) for Pakistan, Arize et al (2000) for Thailand, Alias and Tang (2000) for Malaysia, Tang (2003a); Wang and Lee (2012); and Gozgor (2014) for China, and Arize and Walker (1992) and Tang (2003b;2006;2008a;2008b;2015) for Japan.…”