Determining the behavior of the Egyptian import demand function over the long term (1974-2016)

Document Type : Original Article

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Economics and Public Finance Department Faculty Of Commerce Tanta University Tanta Egypt

Abstract

This study aims to determine the behavior of the import demand function in Egypt in the long term using Johansson's cointegration test based on the trace test and maximum Eigen value test​​. using the analysis of variance decomposition and analysis of  impulse response functions and the unit root test during the period( 19742016). This study found that there is a long run positive relationship between imports and both GDP and prices Trade openness ‚ foreign exchange reserves, as well as a long run negative relationship between both imports and exchange rates. the study also found that when imports deviate from the equilibrium situation in the short term, they need 0.57 year(7months) to correct their position in the direction of their equilibrium value in the long run after the impact of any shock in the model as a result of the change in import determinants. Finally the study concluded by dividing the results of the variance decomposition of prediction to the relative importance of the explanatory variables in explaining the fluctuations in the dependent variable and through the results of the analysis of the impulse response functions to determine the response of each variable to the shocks that occur in itself or to other variables.

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