Emprical Estimation of Asian Import Demand Functions An Implication of Thirlwall's Law for Developing Nations

Preston Bebas

Date of Award

2010

Document Type

Thesis

Degree Name

Bachelors

Department

Humanities

First Advisor

Khemraj, Tarron

Keywords

Econometrics, Development, Thirlwall

Area of Concentration

Economics

Abstract

This thesis estimates the import demand functions for Jordan, Pakistan, Singapore, and Thailand�four developing Asian nations and then uses the estimates obtained from these functions in order to verify �Thirlwall�s law� which equates balance-of-payment constrained income growth to the ratio of the income elasticity of imports and exports growth. This is done by examining the relationship between imports and income and the relative price of goods. As import demand functions descriptive in the long run require a relatively large span of data, the coefficients open themselves to the possibility of changing values due to structural breaks. As such, structural breaks are taken into account in the import functions in a manner often overlooked by previous studies. The results are strongly indicative of structural breaks in all of the import demand functions. These estimated structural breaks correspond to major trade policy changes in three of the four countries. For those three countries, the ability of Thirlwall�s law to accurately estimate income growth greatly improves in the sub-period following the breaks. These results are similar to those of previous studies which have suggested that Thirlwall�s law becomes more descriptive of a nation�s behavior the more that nation becomes globally integrated.

Rights

This bibliographic record is available under the Creative Commons CC0 public domain dedication. The New College of Florida, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.

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