Estimating Import Demand Function in Developing Countries: A Structural Econometric Approach with Applications to India and Sri Lanka

Emran, M. Shahe; Shilpi, Forhad

doi:10.2139/ssrn.1005976

Cited by 2 publications

(4 citation statements)

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“…To explore the impact of foreign exchange reserves on aggregate import demand behavior in Ethiopia, our model draws on the analyses of) [ 15 , 17 , 18 ]. The theoretical framework underlying our model includes the following assumptions:…”

Section: Methodsmentioning

confidence: 99%

“…Following on the empirical frameworks [ 15 , 18 ] we have assumed that (3) and (4) is an add log utility function then: …”

Section: Methodsmentioning

confidence: 99%

“…By inserting [ 15 ] additive log utility function into the original current value, the Hamiltonian equation is rewritten as follows: …”

Section: Methodsmentioning

confidence: 99%

“…The findings emphasize the influence of relative import prices, domestic income, and the nominal effective exchange rate on import volume, satisfying the Marshall-Lerner condition. [ 15 ] estimate the import demand function in developing countries, applying a structural econometric approach with a rational expectation hypothesis of a permanent income model. Stable parameter estimates are observed across countries, indicating the robustness of the model.…”

Section: Literature Reviewmentioning

confidence: 99%

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An empirical estimation of aggregate import demand under foreign exchange constraints: Evidence from Ethiopia

Ali,

Yimer,

Dessie

2024

PLoS ONE

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This study employs the estimation of aggregate import demand under foreign exchange constraints in Ethiopia, utilizing annual time series data from 1985 to 2021. The regression analysis is conducted using the nonlinear autoregressive distributed lag (NARDL) approach to investigate the impact of the accumulation of foreign exchange reserves on aggregate import demand in Ethiopia. The estimation results indicate that, in the long run, all the variables, i.e., foreign exchange reserve, the relative price of imports, real income, volatility of the exchange rate, money supply, and policy dummy, significantly determine the behavior of aggregate imports over the reference period. The findings also show that, in the long run, foreign exchange reserve, real income, and the exchange rate positively affect the demand for imports in Ethiopia. Meanwhile, a positive shock in relative import price and money supply negatively affects import demand in Ethiopia. Thus, the price and income elasticity estimates have correct signs and are statistically significant. The variables included in the model strongly affect import demand in both the short and long run. Finally, policymakers aiming to significantly influence import demand should focus on effective management of these variables, as they strongly affect import volume.

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Section: Methodsmentioning

confidence: 99%

“…Following on the empirical frameworks [ 15 , 18 ] we have assumed that (3) and (4) is an add log utility function then: …”

Section: Methodsmentioning

confidence: 99%

“…By inserting [ 15 ] additive log utility function into the original current value, the Hamiltonian equation is rewritten as follows: …”

Section: Methodsmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

See 2 more Smart Citations