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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Import Demand Function: Some Evidence from Madagascar and Mauritius
Authors:Razafimahefa, Ivohasina FizaraISNI
Hamori, ShigeyukiISNI
Year:2005
Periodical:Journal of African Economies
Volume:14
Issue:3
Period:September
Pages:411-434
Language:English
Geographic terms:Madagascar
Mauritius
Subjects:imports
structural adjustment
Economics and Trade
External link:https://jae.oxfordjournals.org/content/14/3/411.full.pdf
Abstract:The authors empirically analyse the long-run relationship among the variables in the aggregate import demand functions of Madagascar and Mauritius in order to evaluate the appropriateness and effectiveness of the structural adjustment programmes (SAPs). Given the small sample size, they use the recently developed unrestricted error correction model (UECM)-based 'bounds test' to investigate cointegration. The study confirms the existence of cointegration relationship. The long-run income and price elasticities are, respectively, 0.855 and -0.487 for Madagascar and 0.671 and -0.644 for Mauritius. The stabilization and devaluation policies under the SAPs can be effective in reducing import demand. Export demand functions are also estimated. The Marshall-Lerner condition is fully met for Mauritius but unequivocal inference cannot be drawn for Madagascar. While both countries achieved lower external deficits, their economies have shown dissimilar growth performance, with remarkable expansion in Mauritius versus mitigated growth in Madagascar. Hence, the ultimate policy objective should not be confined in containing imports, but should seek to simultaneously improve external balance and economic growth. Bibliogr., notes, ref., sum. [Journal abstract]
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