The dynamics of the relationship between foreign exchange reserves and import demand function
AbstractThis study empirically investigates the dynamics of the relationship between import demand and foreign exchange reserves for an oil-rich and high-income developing country, Oman. This study employs the Autoregressive Distributed Lag (ARDL) model to investigate the impact of real income, dome...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2023-12-01
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| Series: | Cogent Economics & Finance |
| Subjects: | |
| Online Access: | https://www.tandfonline.com/doi/10.1080/23322039.2023.2189623 |
| _version_ | 1797658392942084096 |
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| author | Ibtisam Al Abri Behnaz Saboori Razan Al Humaidi |
| author_facet | Ibtisam Al Abri Behnaz Saboori Razan Al Humaidi |
| author_sort | Ibtisam Al Abri |
| collection | DOAJ |
| description | AbstractThis study empirically investigates the dynamics of the relationship between import demand and foreign exchange reserves for an oil-rich and high-income developing country, Oman. This study employs the Autoregressive Distributed Lag (ARDL) model to investigate the impact of real income, domestic prices, and foreign exchange reserves on aggregate and disaggregated import demand function. Results reveal that total imports are significantly affected by domestic prices only; whereas, demand for goods import is influenced by income. The level of foreign exchange reserves does not influence import demand function. These findings indicate that currency peg stabilization efforts, foreign asset leakages and varying sources of foreign currency could have weakened the link between foreign reserves and import levels. Considering domestic prices and income, competition and efficient production of local goods and services should be further encouraged, especially concerning ongoing issues like food security. Understanding import dynamics enhances robust import forecasts, international trade planning and policy formulation. |
| first_indexed | 2024-03-11T17:58:22Z |
| format | Article |
| id | doaj.art-d110d4a8abe1450a80bf90a4b1672224 |
| institution | Directory Open Access Journal |
| issn | 2332-2039 |
| language | English |
| last_indexed | 2024-03-11T17:58:22Z |
| publishDate | 2023-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Economics & Finance |
| spelling | doaj.art-d110d4a8abe1450a80bf90a4b16722242023-10-17T10:51:06ZengTaylor & Francis GroupCogent Economics & Finance2332-20392023-12-0111110.1080/23322039.2023.2189623The dynamics of the relationship between foreign exchange reserves and import demand functionIbtisam Al Abri0Behnaz Saboori1Razan Al Humaidi2Department of Natural Resources Economics, Sultan Qaboos University, Muscat, OmanDepartment of Natural Resources Economics, Sultan Qaboos University, Muscat, OmanEconomic Research Department, Central Bank of Oman, Muscat, OmanAbstractThis study empirically investigates the dynamics of the relationship between import demand and foreign exchange reserves for an oil-rich and high-income developing country, Oman. This study employs the Autoregressive Distributed Lag (ARDL) model to investigate the impact of real income, domestic prices, and foreign exchange reserves on aggregate and disaggregated import demand function. Results reveal that total imports are significantly affected by domestic prices only; whereas, demand for goods import is influenced by income. The level of foreign exchange reserves does not influence import demand function. These findings indicate that currency peg stabilization efforts, foreign asset leakages and varying sources of foreign currency could have weakened the link between foreign reserves and import levels. Considering domestic prices and income, competition and efficient production of local goods and services should be further encouraged, especially concerning ongoing issues like food security. Understanding import dynamics enhances robust import forecasts, international trade planning and policy formulation.https://www.tandfonline.com/doi/10.1080/23322039.2023.2189623Import demand functionForeign exchange reservesCointegrationAuto-Regressive Distributed Lag (ARDL) modelOmanE52 |
| spellingShingle | Ibtisam Al Abri Behnaz Saboori Razan Al Humaidi The dynamics of the relationship between foreign exchange reserves and import demand function Cogent Economics & Finance Import demand function Foreign exchange reserves Cointegration Auto-Regressive Distributed Lag (ARDL) model Oman E52 |
| title | The dynamics of the relationship between foreign exchange reserves and import demand function |
| title_full | The dynamics of the relationship between foreign exchange reserves and import demand function |
| title_fullStr | The dynamics of the relationship between foreign exchange reserves and import demand function |
| title_full_unstemmed | The dynamics of the relationship between foreign exchange reserves and import demand function |
| title_short | The dynamics of the relationship between foreign exchange reserves and import demand function |
| title_sort | dynamics of the relationship between foreign exchange reserves and import demand function |
| topic | Import demand function Foreign exchange reserves Cointegration Auto-Regressive Distributed Lag (ARDL) model Oman E52 |
| url | https://www.tandfonline.com/doi/10.1080/23322039.2023.2189623 |
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