Financial Development and Estimation of Import Demand Function in Pakistan: Evidence from Combined Cointegration and Causality Tests

Muhammad Ahad (), Talat Afza and Muhammad Shahbaz

Global Business Review, 2017, vol. 18, issue 1, 118-131

Abstract: This article explores the relationship between financial development and imports focusing on economic growth and import prices as potential contributors to this relationship. We have applied combined cointegration and causality tests using multivariate model for long-run and augmented Dickey–Fuller (ADF) as well as Phillips–Perron (PP) unit root to test the order of integration of the variables. The empirical evidence confirms the presence of a long-run relationship among the series. Financial development increases imports demand. Economic growth and imports prices decrease imports consumption. Imports are negatively affected by relative prices.

Keywords: Imports demand function; financial development; economic growth; Pakistan (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:globus:v:18:y:2017:i:1:p:118-131

DOI: 10.1177/0972150916666909

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