China'S Imports: An Empirical Analysis Using Johansen'S Cointegration Approach

December 1, 1994

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Mingwei Yuan, and Kalpana Kochhar. China'S Imports: An Empirical Analysis Using Johansen'S Cointegration Approach, (USA: International Monetary Fund, 1994) accessed October 6, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

In this paper, the behavior of China’s imports during the period 1980-92 is studied. The estimation of cointegration and error correction mechanisms enables the separation of the long-run and short-run determinants of imports in China. The estimated cointegrating vector using Johansen’s cointegration approach shows that, in the long run, China’s imports are sensitive to changes in output, relative prices, and foreign exchange reserves. It also shows that the short-run output elasticity of imports is much greater than that in the long run, suggesting that import substitution may have been an important factor over the sample period. The forecasting ability of a conventional partial adjustment import function is then compared with that of the Johansen cointegration model; the Johansen model is shown to outperform the conventional one in forecasting accuracy.

Subject: Central banks, Foreign exchange, Imports, International reserves, International trade

Keywords: Activity affect imports, Foreign exchange allocation, Import, Import control, Import demand function, Import demand model, Import function, Import model, Import plan, Import regime, Import substitution, Imports, International reserves, Investment import, OLS estimation result, Regime, WP

Publication Details

Pages:

38
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1994/145
Stock No:

WPIEA1451994
ISBN:

9781451856484
ISSN:

1018-5941

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