IMPACT OF EXCHANGE RATE ON IMPORT DEMAND IN PAKISTAN

Mohammad Afzal

Pakistan Journal of Applied Economics, 2002, vol. 18, 123-141

Abstract: The impact of income, real exchange rate, Imports prices and foreign exchange reserves on import demand in Pakistan for the period 1980 to 2008, is addressed in this paper. Income turned out to be the most importnant factor in determining the import demand in the traditional econometric methodology. Long-run relationship exist between imports and real effective exchange rate. There is a uni-directional causality from imports to income and from foreign exchange reserves to imports. and bi-directional causality between import prices and imports. Pakistan's economy suffers from prominent and perplexing macroeconomic imbalances. Adherence to fiscal discipline is expected to ease macroeconomic malaise in the country.

Date: 2002
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