Explaining Nigeria's import demand behaviour: a bound testing approach

This article estimates aggregate import demand function for Jordan using three fully co-integrating regressions over the (1980−2015) period. The bounds testing approach has been employed to test co-integration, while ARDL approach is used to analyze long-run elasticities. The results show a co-integration phenomenon among variables when import volume is dependent variable. In addition, the estimated long-run elasticities of import demand with respect to income and relative prices are 1.16 and -1.03, respectively. The understanding of import demand behavior is crucial for significant import forecasts, international trade planning, and exchange rate policy design.

Trade elasticities are often needed in applied country work for various purposes and this paper describes a method for estimating import demand and export supply elasticities withoutusing econometrics. The paper reports empirical estimates of these elasticities for a large number of low, middle, and upper income countries. One task for which trade elasticities are needed is in developing exchange rate assessments and this paper shows how the estimated elasticities can be used for this purpose.

Purpose: After the trade liberation, Bangladesh has faced the crisis of trade imbalance. Therefore, trade liberation is considered as the driving force behind the crisis. To investigate this historical allegation, this study aims at analysing the factors that determined the post trade liberalisation aggregate import demand function of Bangladesh.
 
 Design/Methodology/Approach: Based on quarterly data from trade liberalisation period to reaching the economic stability period, 1992Q1 - 2007Q4, an autoregressive distributed lag (ARDL) approach to cointegration and an error correction model (ECM) have been utilised to estimate the impacts of natural calamity, gross domestic product, foreign exchange reserve, relative price and tariff on aggregate import demand of Bangladesh.
 Findings: Empirical results revealed that the natural calamity is identified to be nonresponsive to the nation's aggregate import demand both in the short and long run. This indicates that Bangladesh can meet the natural crisis related demand by herself without influencing its aggregate import demand. Results also revealed that the import volume of Bangladesh is cointegrated with relative import price, actual GDP and real foreign exchange reserve of the country. The import demand of the country can largely be described by its real GDP, while it is found inversely associated with relative price ratio in the long run. The long run association among import demand and tariff rate indicates that trade liberalisation has a significant positive impact on the country's aggregate import demand, as well as real foreign exchange reserve, as explained by the reduction in tariff rate.
 
 Research Implication: Developing countries like Bangladesh and the relevant business stakeholders would have considerable implications of such empirical findings with their trade policies, particularly how they should respond to unpredictable scenarios caused by the factors such as natural calamity, foreign exchange reserve, tariff, etc.
 
 Originality Value: The originality of the study lies in its uniqueness in using the historical data and factors that no studies have so far used in analysing the import demand function of Bangladesh.
 
 Keywords: Natural calamity, import demand, foreign exchange reserve, gross domestic product, tariff, trade liberalisation, Bangladesh.
 
 Cite as: Shikha, H. A., Alam, M. M., Murad, M. W., Said, J., & Ahmed, Z. U. (2023). A historical perspective of trade liberalisation dynamics in Bangladesh: impacts of natural calamity risk, gross domestic product, foreign exchange reserve, relative price and tariff on import demand. Journal of Nusantara Studies, 8(TI), 177-208. http://dx.doi.org/10.24200/jonus.vol8issTIpp177-208

Static and dynamic models of the derived demand for forest product imports were estimated for each of 10 major forest products covering industrial roundwood, wood-based panels, pulp, and paper and paperboard. The models were estimated with panel data from 64 countries for 1970–1987, by pooled ordinary least squares, first differencing, fixed effects, random effects and the Arellano–Bond approach. The predictive accuracy of the demand equations was tested with postsample data from 1988–1997. Based on multiple criteria, the best results were obtained with the dynamic model estimated by the Arellano–Bond method. For most products the demand for imports was found to be inelastic with respect to price. For all products the demand for imports was elastic with respect to income.

Import Demand Elasticity and Exporter Responses to Anti-Dumping Duties

This study estimates real income and relative price elasticities of demand for US exports and imports of tourism with annual data from 1973–2002. Overall, there is empirical support for the model of tourism expenditure. With one exception, the estimated parameters have the correct signs, and most are significantly different from zero. The US trading partners appear to be more sensitive to the determinants of international tourism than is the US The greater response (of the US trading partners) to changes in real income may account for the US running surpluses on its tourism balance during 16 of the 29 years of our sample period.

The violence of exchange-rate fluctuations in countries which in the past, have had unregulated markets for foreign exchange has frequently led to the conjecture that a system of market exchange rates may be inherently unstable. The condition of stability, of course, is that: a rise in the price of foreign currency shall reduce the excess demand for such foreign exchange. The relation of this condition to elasticities of demand for imports and elasticities of supply of exports has been investigated in considerable detail by Alfred M a r s h a 1, Mrs. Joan R o b i n s o n, C. W. B i c k e r d i k e, A. J. B r o w n, and others. All of the investigators have considered a world economy consisting of only two countries, and the conclusions they reached are as follows: (1) If exports are produced under constant price both at home and abroad, stability requires that the sum of the important demand elasticities at home and abroad must exceed unity. (2) If the elasticity of supply of exports is zero at home and abroad, the exchange market is always stable regardless of the demand elasticities. (3) In the intermediate case, stability requires that y1y2(e1-fe2+1) + e,e2(ql +2-1) shall be positive, where Yl and Yq2 are import demand elasticities at home and abroad and where e1 and e2 are export supply elasticities. Brown considers an additional complication in which each country's exports consist partly of imported materials, and concludes that the presence of such imported materials increases the stability of the market. It is easily shown, however, that this conclusion is incorrect. If exports are produced at constant supply price, the condition of stability, after allowing for imported raw materials, is: r +'r2y2 > 1 where Yi and y2 are elasticities of demand for imports of finished goods, and where r1 andr2 are the' ratios of the value of exports retained by domestic producers to the total value of exports. Since these ratios are less than unity, and will be considerably less than unity if imported materials comprise a large part of the cost of exports, it follows. that the exchange market may be unstable even when q1 + 112 exceeds unity. If exchange markets are 'stable as of given supply and demand schedules, the possibility still remains that they may be made unstable

This study explores the role of financial sector on import demand behaviour (the real sector) from general equilibrium perspective, which is based on the portfolio balance approach to capture financial market. Japan’s data support partially this hypothesis given noncointegration finding, while foreign interest rate is significant i.e. reduces Japan’s imports. Growth in foreign income is the most influential factor, and domestic economic growth both make more imports. However, the relative price of domestic goods, and domestic interest rate are insignificant. Japan’s monetary policy (interest rate) is inappropriate in altering the behaviour of imports in Japan, but fiscal policy that influences Japan’s economic growth.

ABSTRACTI apply limited-information maximum likelihood (LIML) to estimate import demand and export supply elasticities for a range of eurozone countries. The results highlight inconsistencies in the parameters estimated by LIML relative to an estimator that is robust to heteroskedasticity. The nature of the structural equations reveals complications generated by the limiting behavior of the parameters that can be replicated in finite samples. The results of simulations underscore improvements in parameter estimates in a three-dimensional panel, suggesting that the problem of limiting behaviour can be overcome in larger dataset/panels.

En esta investigación se analiza el papel de las exportaciones e importaciones industriales en el crecimiento del sector, bajo un enfoque de crecimiento restringido por balanza de pagos, en el periodo 1975-2015. Los resultados empíricos, obtenidos a través de la técnica de corrección de errores, muestran que mientras las elasticidades ingreso de la demanda de exportaciones e importaciones industriales generan un déficit comercial, los precios tienden a contrarrestarlo; sin embargo, la balanza comercial industrial es deficitaria durante todo el periodo de análisis. Los resultados también evidencian que el sector externo industrial explica un porcentaje alto del total de las exportaciones e importaciones nacionales, aspecto paradójico y preocupante para el crecimiento agregado del país, si se considera que la participación del sector industrial en el desarrollo de la economía colombiana es cada vez menor. Se concluye que el crecimiento industrial colombiano es explicado por las elasticidades ingreso de la demanda de las exportaciones e importaciones y por los precios (tipo de cambio real), que el crecimiento potencial del sector es mayor al observado y que el efecto del sector industrial sobre el crecimiento del país es muy bajo.

Elasticities of import demand and supply often drive economic models, but few empirical estimates of these elasticities exist for vegetables and fruits. For those that do exist, most are outdated. Because elasticities change over time as income, prices, and market conditions change, outdated elasticity estimates may not be representative of changes in import quantities demanded or in acreages, yield, and quantities supplied. Moreover, import demand elasticities by country of origin for most vegetables and fruits are nonexistent. This article presents research that updates elasticity estimates for each of the selected product categories and includes production and trade implications.

The link between economic development and the income elasticity of import demand

Export Markets for Canada's Foodgrains and Feedgrains

This paper applies the balance-of-payments-constrained growth model to 17 countries of Latin America over the period 1977-2002. The crucial parameter to estimate is the income elasticity of demand for imports, which is done for Latin America as a whole and for individual countries. As well as estimating over the whole period, the technique of rolling regressions is also used to test whether a trend increase can be discerned as a result of trade liberalization. A trend increase is found for Latin America as a whole and for some individual countries, and the balance-of-payments equilibrium growth rate is a good predictor of growth performance in nine of the 17 countries. There is no evidence that the balance-of-payments equilibrium growth rate has increased in Latin America as a result of trade liberalization.

The Marshall-Lerner condition is a condition that is judged to assess the long-run effects of currency depreciation on the trade balance. It is obtained by estimating price elasticities of a country's demand for imports and rest of the world demand for its exports. When the analysis is extended to bilateral level between two countries using aggregate bilateral trade data or bilateral commodity data, due to lack of prices researchers directly relate inpayments and outpayments to the exchange rate in addition to scale variables. In this paper we try to determine the short-run and long-run effects of real depreciation of the dollar on inpayments of 141 US industries that export to Singapore and 59 US industries that import from Singapore. While we find that most industries are affected in the short-run. However, the short-run effects last into the long-run only in 45 exporting industries and 15 importing industries. Most of the affected industries are small.