A REEXAMINATION OF SOUTH KOREA¡¯S AGGREGATE IMPORT DEMAND FUNCTION: THE BOUNDS TEST ANALYSIS

Tsangyao Chang, Yuan-Hong Ho () and Chiung-Ju Huang
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Yuan-Hong Ho: Department of Public Finance, Feng Chia University
Chiung-Ju Huang: Department of Public Finance, Feng Chia University

Journal of Economic Development, 2005, vol. 30, issue 1, 119-128

Abstract: This paper uses a robust estimation method referred to as the unrestricted error correction model - the bounds test analysis to re-analyze the long-term relationships between the demand for imports and it¡¯s determinants for South Korea over the period 1980-2000. Our results show that the volume of imports, income, and relative prices are all cointegrated. The estimated long-run (short-run) elasticities of import demand with respect to income and relative price are 1.86 (0.86) and -0.2 (-0.05), respectively. The major implication of our study is that neither monetary nor fiscal policies may be used as instruments to maintain the trade balance in South Korea¡¯s favor during this sample period.

Keywords: Aggregate Import Demand Function; UECM; Bounds Test Analysis (search for similar items in EconPapers)
JEL-codes: C22 C32 F14 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:jed:journl:v:30:y:2005:i:1:p:119-128

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