Conventional specifications of import demand in LDCs have commonly been plagued by implausible and unstable parameter estimates. This paper shows the importance of imposing long-run income homogeneity and of including foreign exchange reserves when estimating import demand function for an LDC....

In this paper we obtain and interpret new estimates of the short- and long-run influence of exchange-rate volatility (or risk) on the import flows of the United States, in the generalized floating exchange-rate period. The major finding is that there is a significant long-run negative effect of...

Theory suggests that inflation variability should affect real money balances, although there is ambiguity about the sign of the effect. Using cointegration and vector-error correction (VEC) modeling techniques, this paper presents new evidence on the effect of inflation variability on the demand...

Theoretical and empirical studies concerned with the effects of devaluation on domestic production have generally concluded that while in industrial countries devaluation is expansionary, in developing nations it is contractionary. In this paper we consider the experience of Korea alone. After...

The cointegration technique is now a common method of estimating any money demand function. Numerous studies that applied this technique to estimate the money demand function in Greece, interpreted their finding of cointegration as a sign of stable money demand. In this paper, after...

The Marshall-Lerner condition postulates that if the sum of import and export demand elasticities add up to more than one, devaluation should improve the trade balance in the long-run. This paper is the first to employ a long-run method, i.e., cointegration technique to estimate trade...

Few studies have investigated the long-run convergence between imports and exports of a country. This paper investigates the Korean experience and founds that korea's imports and exports are cointegrated. The results indicate that Korea is not in violation of its international budget constraint....