Export, Import Demand in Mongolia: Income and Price Elasticities

Dulamzaya Batjargal

MPRA Paper from University Library of Munich, Germany

Abstract: This empirical research estimates the long-term price and income elasticities of Mongolia’s foreign trade using ARDL model and time series of foreign trade, GDP, prices, export and import prices from 2002 to 2018. The research findings confirm a long-term relationship between export and import demand and relative prices and income. Although the estimated price elasticities are relatively weak, with the import price elasticity at -0.65 and export price elasticity at 0.5, the Marshal-Lerner condition holds in the long run. This implies that the depreciation (appreciation) of Mongolian togrog improves (worsens) the trade balance. Moreover, the income elasticity of imports (1.6) is significantly higher than that of exports (0.46), indicating that an increase in domestic demand leads to a deterioration of the trade balance.

Keywords: Export demand; import demand; trade elasticity; ARDL model (search for similar items in EconPapers)
JEL-codes: F14 (search for similar items in EconPapers)
Date: 2018, Revised 2018
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:124028

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