How Do Foreign and Domestic Demand Affect Exports Performance? An Econometric Investigation of Indonesia's Exports

Rudy Rahmaddi (rudy.rahmaddi@customs.go.id) and Masaru Ichihashi

No 1-4, IDEC DP2 Series from Hiroshima University, Graduate School for International Development and Cooperation (IDEC)

Abstract: This paper explores the impacts of foreign and domestic demand on Indonesia's exports within demand and supply frameworks using aggregate data of 1971 - 2007. To capture effects of secular and cyclical movements on exports, we dissect income variables into trend and business cycle as proxies of productive capacity and capacity utilization rate, respectively. Our result suggests that both demand- and supply-price elasticity are elastic, and secular and cyclical movements may have contrast effects on exports. The findings draw policy implications namely the importance of price-based policy, provision of adequate and sound infrastructures, and further development of human capital-based industrialization.

Keywords: Exports; demand and supply for exports; domestic demand pressure; Indonesia; simultaneous equations. (search for similar items in EconPapers)
JEL-codes: C36 F11 O19 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2011-09, Revised 2012-01
New Economics Papers: this item is included in nep-cse, nep-dev, nep-int and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published in Modern Economy, Vol.3 No.1, January 2012, Pages 32-42

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