Import's Price and Income Elasticity Estimates: Reconsidering the Evidence for Pakistan

saleem khan

Abstract


Abstract: This paper largely explains for the price and income elasticity estimates in Pakistan’s import demand. The aim is to obtain and construe the new estimates of the responsiveness of real imports demand to real effective exchange rate and domestic income in Pakistan using the annual data set and ARDL application. The empirical result indicates evidence of co-integration among the variables. Majorly and differently, the study found in evidence that in the long run real imports are significantly price inelastic, when the effective exchange rate were used as a measure of price competitiveness. Furthermore, along with price inelastic imports found highly income elastic i.e. a one percent increase in domestic income level will have to increase imports demand by more than one percent. Thus, the results make obvious for case study the relative responsiveness of imports demand to changes in exchange rate and domestic income level.

 


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ISSN : 2251-1555