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The determinants of aggregate and dis-aggregated import demand in Ghana

Nomfundo Portia Vacu (Department of Economics, University of South Africa, Pretoria, South Africa) (Local Government, Financial and Fiscal Commission, Midrand, South Africa)
Nicholas Odhiambo (Department of Economics, University of South Africa, Pretoria, South Africa)

African Journal of Economic and Management Studies

ISSN: 2040-0705

Article publication date: 10 May 2019

Issue publication date: 19 August 2019

Abstract

Purpose

The purpose of this paper is to examine the determinants of aggregate and dis-aggregated import demand for Ghana for the period from 1985 to 2015.

Design/methodology/approach

The study employed the autoregressive distributed lag bounds testing approach.

Findings

The long-run finding show that aggregate import demand (AIMD) is positively determined by exports of goods and services and consumer spending, but negatively determined by foreign exchange reserves. It is found that consumer spending is the key positive determinant of the import demand of consumer goods, while foreign exchange reserves, trade liberalisation policy and relative import price are negative determinants. It is found that import demand of intermediate goods is positively determined by consumer spending, government spending and investment spending. The long-run findings further confirm that import demand of capital goods is negatively determined by relative import price. In the short run, the findings suggest that AIMD is positively affected by exports of goods and services, investment spending and consumer spending, but negatively affected by foreign exchange reserves. Import demand of consumer goods is positively influenced by consumer spending, but negatively determined by relative import price. Finally, import demand for intermediate goods is found to be positively determined by investment spending and government spending, while import demand for capital goods is positively associated with exports of goods and services and trade liberalisation policy in the previous period.

Originality/value

A number of studies have looked at the determinants of import demand, focussing on the aggregated import demand. This study adds the component of dis-aggregated import demand, as it assist in dealing with the issues of bias.

Keywords

Citation

Vacu, N.P. and Odhiambo, N. (2019), "The determinants of aggregate and dis-aggregated import demand in Ghana", African Journal of Economic and Management Studies, Vol. 10 No. 3, pp. 356-367. https://doi.org/10.1108/AJEMS-08-2018-0246

Publisher

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Emerald Publishing Limited

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