China'S Imports: An Empirical Analysis Using Johansen'S Cointegration Approach

Mingwei Yuan and Kalpana Kochhar

No 1994/145, IMF Working Papers from International Monetary Fund

Abstract: In this paper, the behavior of China’s imports during the period 1980-92 is studied. The estimation of cointegration and error correction mechanisms enables the separation of the long-run and short-run determinants of imports in China. The estimated cointegrating vector using Johansen’s cointegration approach shows that, in the long run, China’s imports are sensitive to changes in output, relative prices, and foreign exchange reserves. It also shows that the short-run output elasticity of imports is much greater than that in the long run, suggesting that import substitution may have been an important factor over the sample period. The forecasting ability of a conventional partial adjustment import function is then compared with that of the Johansen cointegration model; the Johansen model is shown to outperform the conventional one in forecasting accuracy.

Keywords: WP; import; regime; import demand model; foreign exchange allocation; import plan; activity affect imports; import demand function; investment import; import substitution; import function; import regime; import model; import control; OLS estimation result; Imports; International reserves (search for similar items in EconPapers)
Pages: 38
Date: 1994-12-01
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Citations: View citations in EconPapers (3)

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