Aggregate Import demand and Expenditure Components in Ghana:An Econometric Analysis

Frimpong, Joseph Magnus and Oteng-Abayie, Eric Fosu (2006): Aggregate Import demand and Expenditure Components in Ghana:An Econometric Analysis.

Abstract

In this paper, the behaviour of Ghana’s imports during the period 1970-2002 is studied using disaggregated expenditure components of total national income. We use the newly developed bounds testing approach to cointegration and estimated an error correction model to separate the short- and long-run elements of the import demand relationship. The study shows inelastic import demand for all the expenditure components and relative price. In the long-run, investment and exports are the major determinant of movements in imports in Ghana. In the short run household and government consumption expenditures is the major determinant of import demand. Import demand is not very sensitive to price changes.

• Item Type: MPRA Paper
• Language: English
• Keywords: import demand; imperfect substitution; ARDL cointegration; bounds test approach
• Subjects: F - International Economics > F1 - Trade > F10 - General; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics

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