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

• Tác giả: M. Shahe Emran
• Ngôn ngữ: eng
• Ký hiệu phân loại: 609.54 Historical, geographic, persons treatment
• Thông tin xuất bản: 2012
• Bộ sưu tập: Tài liệu truy cập mở
• ID: 328377
• Chủ đề: 1. Country and Industry Studies of Trade F140; 2. International Linkages to Development; 3. Model Construction and Estimation C510; 4. Role of International Organizations O190

Tóm tắt

Owing to the unavailability of time-series data on the domestic market-clearing price of imports, the estimation of notional price and income elasticities of aggregate import demand remains a daunting task for a large number of developing countries. This paper develops a structural econometric model of a two-goods representative agent economy that incorporates a binding foreign exchange constraint at the administered prices of imports. A theoretically consistent parameterization of the "virtual relative price" of imports circumvents the data problem, and thus enables the estimation of income and price responses by cointegration approach. The price and income elasticity estimates for India and Sri Lanka, in contrast to the extant literature, have correct signs, high statistical significance, and plausible magnitudes.