Aggregate Import Demand and Expenditure Components in five ASEAN Countries: An Empirical Study

Mohammad Haji Alias, Tuck Tang and Jamal Othman
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Mohammad Haji Alias: Professor Kolej Universiti Islam Malaysia
Tuck Tang: Lecturer Business School & Information Technology Monash University Malaysia
Jamal Othman: Associate Professor Faculty of Economics Universiti Kebangsaan Malaysia 43600 UKM Bangi Selangor Darul Ehsan

Jurnal Ekonomi Malaysia, 2001, vol. 35, 37-60

Abstract: This paper examines the long run relationship between aggregate imports and expenditure components of five ASEAN countries using Johansen multivariate cointegration analysis. The ASEAN-5 countries considered are Malaysia, Indonesia, the Philippines, Singapore and Thailand. Annual data for the period 1968-1998 are used wiith the exception of Singapore, with a shorter sample period, 1974-1998. The final demand expenditure variable is disaggregated into public and private consumption expenditure, investment expenditure and exports. The use of a disaggregated demand variable, as opposed to the use of a single demand variable, is justified by the possibility that each final demand component may have different import contents. The approach employed in this study avoids the problem of aggregation bias. The results of Johansen s multi variate test reveal that import demand is cointegrated with its determinants for all ASEAN-5 countries. Short-run variations in import demand found t0 be influenced by variations in relative prices and macro components of final demand. Import demand is also found to be elastic with respect to relative prices for all ASEAN-5 countries except the Philippines. The findings provide a relevant for policy implications.

Date: 2001
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