Foreign Trade Regimes and Import Demand Function: Evidence from Sri Lanka

27 Pages Posted: 9 May 2002

See all articles by M. Shahe Emran

M. Shahe Emran

George Washington University - Department of Economics

Forhad Shilpi

World Bank - Development Research Group (DECRG)

Date Written: October 2001

Abstract

Time series data for Sri Lanka span periods of pervasive trade and exchange restrictions along with periods of liberalized trade. This paper implements a structural econometric model of aggregate imports which incorporates the implications of the shifts in the policy regime. The results demonstrate that the model outperforms the existing alternatives both on statistical and economic grounds. The estimated elasticities, in contrast to the available evidence, have correct signs, high statistical significance, and plausible magnitudes. The implications for policy analysis like calculation of equilibrium exchange rate are discussed.

Keywords: Import Demand, Trade Policy, Sri Lanka, Cointegration, Intertemporal Substitution

JEL Classification: F14, F31, O16, C51

Suggested Citation

Emran, M. Shahe and Shilpi, Forhad, Foreign Trade Regimes and Import Demand Function: Evidence from Sri Lanka (October 2001). Available at SSRN: https://ssrn.com/abstract=309081 or http://dx.doi.org/10.2139/ssrn.309081

M. Shahe Emran

George Washington University - Department of Economics ( email )

2115 G Street NW
302 Monroe Hall
Washington, DC 20052
United States

Forhad Shilpi (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-458-7476 (Phone)
202-522-1151 (Fax)

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