An Analysis of UK Imports Using Multivariate Cointegration.

This paper uses the multivariate cointegration technique of Johansen to construct a manufacturing imports equation for the UK over the period from 1970 to the end of 1991. Imports are modeled in share form with a unit long-run elasticity on demand. The long-run equations are similar to those used in the Treasury and the National Institute of Economic and Social Research models. Impulses responses from the five equation system are sensible, lending support to the adequacy of the short-run models. Out-of-sample simulations find that there is a tendency for an increase in the share of manufacturing imports despite a continued domestic recession and slow recovery to the end of 1995. Copyright 1994 by Blackwell Publishing Ltd