A Reassessment of Pakistan's Aggregate Import Demand Function: An Application of Ardl Approach

The present study re-estimated the import demand function for Pakistan on the basis of quarterly time series data by employing autoregressive distributed lag approach. The present study draws various significant conclusions from the estimation of aggregate merchandized import demand function. The results support the proposition that in Pakistan there exist a long-run relationship among, import demand, real economic growth, real effective exchange rate and real effective exchange rate volatility. It further found that aggregate import demand is income and price inelastic, implying that Pakistan's imports comprises essential goods. The study found evidence to suggest that real effective exchange rate volatility has adverse effect on import demand for Pakistan in long-run.