Determinants of Aggregate Import

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This book is based on the investigation about the impact of basic determinants of aggregate import demand in Pakistan by taking sample data of 19 years and applying ordinary Least Squares method. The quantitative estimates revealed that imports of Pakistan are more sensitive to real income and comparatively less sensitive to import prices. The estimated elasticities indicate that imports are sensitive to real income (1.85), and the value of price elasticity of demand for imports in Pakistan is (-0.66). Thus, income elasticity of demand for imports is greater than price elasticity in the case of Pakistan. A relatively small price elasticity of import demand of Pakistan is mainly due to the high domestic inflationary pressures and it suggests that exchange rate policies in Pakistan are not likely to be effective in dealing with balance of payments deficit.