AN ECONOMETRIC ESTIMATION OF TRADITIONAL IMPORT DEMAND FUNCTION FOR PAKISTAN

TL;DRAbstract

Many studies have estimated the aggregate import demand function for Pakistan by using non-stationary data. 1 Their findings suffer from the so-called 'spurious regression' problem. This study attempts to estimate the aggregate import demand function for Pakistan by employing Johansen and Juselius cointegration technique on the annual data for the period 1975-2005. Our results show that there is long-run equilibrium relationship among variables and the stability tests indicate that import demand function remains stable over the sample period and hence the estimated results are appropriate for policy implications.

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