Murad, S. M. Woahid (2012): Bilateral Export and Import Demand Functions of Bangladesh: A Cointegration Approach. Published in: Bangladesh Development Studies , Vol. Vol. X, No. March 2012, No. 1 (March 2012): pp. 43-60.
Download (222kB) | Preview
The past attempts to investigate whether the Marshall-Lerner condition is fulfilled by using aggregate data in Bangladesh suffer from aggregation bias. This paper estimates trade elasticities using bilateral data between Bangladesh and its major trading partners. The results, using data covering 1973-2009, confirm long run relationships of volumes of export and import with real exchange rate and real income. The study unveils that the Marshall-Lerner condition holds only in case of the United States. As such, the depreciation of real exchange rate may not be effective in improving the trade balance of Bangladesh in the long run.
|Item Type:||MPRA Paper|
|Original Title:||Bilateral Export and Import Demand Functions of Bangladesh: A Cointegration Approach|
|Keywords:||Bilateral Marshall-Lerner condition; Cointegration; Exchange Rate; Bangladesh|
|Subjects:||F - International Economics > F1 - Trade > F15 - Economic Integration
C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation
C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models
F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations
F - International Economics > F3 - International Finance > F31 - Foreign Exchange
|Depositing User:||S. M. Woahid Murad|
|Date Deposited:||30. Jul 2012 09:31|
|Last Modified:||12. Jan 2016 08:21|
Alam, M. R. 2010. “Impact of Real Depreciation of Taka of Export Earning of Bangladesh: A Causality Analysis.” World Journal of Management, 2(2): 36-44.
Bahmani-Oskooee, M. 1999. “Cointegration Approach to Estimating Bilateral Trade Elasticities between U.S. and Her Trading Partners.” International Economic Journal, 13(4): 119-128.
Bahmani-Oskooee, M., and J. Cheema. 2009. “Short-Run and Long-Run Effects of Currency Depreciation of the Bilaterial Trade Balance between Pakistan and Her Major Trading Partners.” Journal of Economic Development, 34(1): 19-46.
Choudhury, R. Z. 2001. “Export Demand Function of Bangladesh: An Econometric Exercise.” The Bangladesh Development Studies, XXVII (3).
Davidson, R. and J. G. Mackinnon. 2004. Econometric Theory and Methods. New York: Oxford University Press.
Dickey. D. A. and W. A. Fuller. 1981. “Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root.” Econometrica, 49: 1057-72.
Dornbusch, R. 1980. Open Economy Macroeconomics. New York. Basic Books.
Emran, M. S. and F. Shilpi. 1996. “Foreign Exchange Rationing and the Aggregate Import Demand Function.” Economics Letters, June, pp.315-322.
Hatemi-J, A. and M. Irandoust. 2005. “Bilateral Trade Elasticities: Sweden Versus Her Major Trading Partners.” American Review of Political Economy, 3(2): 38-50.
Hay, Q. M. and M. Mashkoor. 2010. “Import Demand Function for Bangladesh: A Rolling Window Analysis.” African Journal of Business Management, 4(10): 2150-2156.
Hossain, A. 2000. Exchange Rates, Capital Flows and International Trade: A Case of Bangladesh. Dhaka, Bangladesh: University Press Limited.
Houthakker, H. S. and S. P. Magee. 1969. “Income and Price Elasticities in World Trade.” Review of Economics and Statistics, 51(2).
Islam, A. 2010. “Estimation of Trade Elasticities: An Application of Johansen’s Cointegration Method to the Bangladesh Trade Data.” Journal of Economic Cooperation and Development, 31(3).
Islam, A. M., and M. K. Hassan. 2004. “An Econometric Estimation of the Aggregate Import Demand Function for Bangladesh: Some Further Results.” Applied Economics Letters, 11.
Jiranyakul, K. and T. Brahmasrene. 2002. “An Analysis of the Determinants of Thailand’s Exports and Imports with Major Trading Partners.” Southwestern Economic Review, 29(1&2): 111-121.
Johansen, S. 1988. “Statistical Analysis of Cointegrating Vectors.” Journal of Economic Dynamics and Control, 12: 231-254.
———1995. Likelihood-Based Inference in Cointegrating Vector Autoregressive Models. New York: Oxford University Press.
Johansen, S. and K. Juselius. 1990. “Maximum Likelihood Estimation and Inference on Cointegrating with Applications to the Demand for Money.” Oxford Bulletin of Economics and Statistics, 52: 169-210.
Johnston, J. 1984. Econometric Methods. Third Edition. New York: McGraw-Hill.
Kabir, R. 1988. “Estimating Import and Export Demand Function: The Case of Bangladesh.” The Bangladesh Development Studies, XVI (4): 115-127.
Khatoon, R. and M. M. Rahman 2009. “Assessing the Existence the Existence of the J-Curve Effect in Bangladesh.” The Bangladesh Development Studies, XXXII(2).
Mankiw, N. G. 2010: Macroeconomics (7th ed.). Worth Publishers.
Marquez, J. 1990. “Bilateral Trade Elasticities.” The Review of Economics and Statistics, February, pp.70-77.
Nur, A., A. Wijeweera and B. Dollery. 2007. “Estimating of the Export Demand Function using Bilateral Trade Data: The Case of Bangladesh.” South Asian Economic Journal, 8(2): 249-264.
Philips, P. C., and P. Perron. 1988. “Testing for a Unit Root in Time Series Regression.” Biometrika, 75: 335-46.
Prasad. DM. N., and P. Ranade. 1996. “India’s Trade Balance in the Eighties – An Econometric Analysis.” Working Paper No. 96/13. University of Bombay, Department of Economics, Bombay.
Shirvani, H., and B. Wilbratte. 1997. “The Relationship between the Real Exchange Rate and the Trade Balance: An Empirical Reassessment.” International Economic Journal, 11(1).
Tang, T. C. 2002. “Determinants of Aggregate import Demand in Bangladesh.” Journal of Bangladesh Studies, 4: 37-46.
Thorbecke, W., and G. Komoto. 2010. “Investigating the Effect of Exchange Rate Changes on Transpacific Rebalancing.” ADBI Working Paper 247. Asian Development Bank Institute, Tokyo.
Wijeweera, A., M. Nur, and B. Dollery. 2008. “Bilateral Import Demand Elasticities the case of Bangladesh.” International Research Journal of Finance