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Aggregate Import Demand Behavior For Indonesia: Evidence From The Bounds Testing Approach

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  • Tuck Cheong Tang

Abstract

This paper empirically re-estimates the long-run relationship between Indonesian aggregate import demand and its determinants; namely, real income and relative import prices. In contrast to previous studies (Reinhart, 1995; and Senhadji, 1998), the result of the bounds test (Pesaran et al., 2001) reveals that import volume, real income and relative import prices are cointegrated. This is an important finding from the viewpoint of the Indonesian economic policy. The estimated long-run elasticity of real income and relative price are 0.98 and –0.4 respectively.

Suggested Citation

  • Tuck Cheong Tang, 2002. "Aggregate Import Demand Behavior For Indonesia: Evidence From The Bounds Testing Approach," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 10(2), pages 179-199, December.
    • Handle: RePEc:ije:journl:v:10:y:2002:i:2:p:179-199
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    References listed on IDEAS

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    12. Tuck Cheong Tang & Mahendhiran Nair, 2002. "A cointegration analysis of Malaysian import demand function: reassessment from the bounds test," Applied Economics Letters, Taylor & Francis Journals, vol. 9(5), pages 293-296.
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    Cited by:

    1. Vacu, Nomfudo P. & Odhiambo, Nicholas M., 2020. "The Determinants of Import Demand in South Africa: An Empirical Investigation," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 73(1), pages 51-76.
    2. Kira Hibbert & Ranjini Thaver & Mark Hutchinson, 2012. "An Econometric Analysis Of Jamaica’S Import Demand Function With The Us And Uk," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 6(1), pages 109-120.
    3. Mohamed Ibrahim Mugableh, 2017. "Estimating Elasticity Function of Jordanian Aggregate Import Demand," Applied Economics and Finance, Redfame publishing, vol. 4(2), pages 33-37, March.
    4. M. Adetunji Babatunde & Festus O. Egwaikhide, 2010. "Explaining Nigeria's import demand behaviour: a bound testing approach," International Journal of Development Issues, Emerald Group Publishing Limited, vol. 9(2), pages 167-187, July.

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    More about this item

    Keywords

    Aggregate import demand; Bounds testing approach; Indonesia;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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