AGGREGATE IMPORT DEMAND BAHAVIOR FOR INDONESIA: EVIDENCE FROM THE BOUNDS TESTING APPROACH

Authors

  • Tuck Cheong Tang School of Business and Information Technology, Monash University Malaysia, 2 Jalan Kolej, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan, Malaysia (e-mail: tang.tuck.cheong @busit.monash.edu.my)

Abstract

This paper empirically re-estimates the long-run relationship between Indonesian aggregate import demand and its determinants; namely, real income and relative import prices. In contrast to previous studies (Reinhart, 1995; and Senhadji, 1998), the result of the bounds test (Pesaran et al., 2001) reveals that import volume, real income and relative import prices are cointegrated. This is an important finding from the viewpoint of the Indonesian economic policy. The estimated long-run elasticity of real income and relative price are 0.98 and -0.4 respectively.

JEL classification: C22, F14

Key words: Aggregate import demand, Bounds testing approach, Indonesia

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How to Cite

Tang, T. C. (2013). AGGREGATE IMPORT DEMAND BAHAVIOR FOR INDONESIA: EVIDENCE FROM THE BOUNDS TESTING APPROACH. International Journal of Economics, Management and Accounting, 10(2). Retrieved from https://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/83

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