Estimation of Iran’s sugar import demand function (ARDL approach)

Document Type : Scientific - Research

Authors

1 Graduated M.Sc of Agricultural Economics Department, Agriculture and Natural Resource faculty, Ardakan University, Ardakan, Iran.

2 Assistant Professor of Agricultural Economics Department, Agriculture and Natural Resource faculty, Ardakan University, Ardakan, Iran.

3 Associate professor of Agricultural Economics Department, Agriculture and Natural Resource faculty, Ardakan University, Ardakan, Iran.

Abstract

The purpose of this study was to estimate the demand for Iranian sugar imports considering the two countries of Brazil and the United Arab Emirates as the major importers of sugar to Iran. It should be noted that the UAE acts as a re-exporter and is not a sugar producer. Therefore, time series data from 1992-2016 and Auto-Regressive Distributed lag (ARDL) was used. The results of long-term estimates show that 1% increase in GDP increases the demand for sugar imports by 4.73%, and 1% increase in relative prices and exchange rate reduces the demand for sugar imports by 28%. Also, if the Brazilian export rate increases by one unit, the demand for Iranian sugar imports from Brazil would increase by 0.8% unit compared with the UAE. The Error Correction Model (ECM) in the sugar import demand function also shows that the rate of 0.68% deviation of sugar import from its long-term path is corrected by pattern variables in the next period. Finally, policymakers should consider the exchange rate variable as one of the most important factors influencing foreign trade, especially sugar.

Keywords

References

Alenabi S, Kazemnejad M, Barabari A. Analysis of Price Transmission and Relationship between Import and Domestic Price of Sugar in Iran. Agricultural Economics and development. 2013; 84:161-176. (in Persian, abstract in English)
Aljebrin M. The determinants of the demand for imports in GCC countries. International Journal of Economics and Finance. 2012; 4(3).126-138. http://dx.doi.org/10.5539/ijef.v4n3p126
Ariz A, Nippani S. Import Demand Behavior in Africa: Some New Evidence. The Quaterly Review of Economics and Finance. 2010; 50:254-263. https://doi.org/10.1016/j.qref.2010.02.003
Bahmani Oskoee M, Goswawi G. Exchange rate sensitivity of Japan's bilateral trade flows. Journal of Japan and The World Economy. 2004; 16: 25-38. https://doi.org/10.1016/S0922-1425(03)00016-1
Branson William H. Macroeconomic Theory and Policy. Seventh Edition. Tehran. Nai publication. Abas shakeri.2004. (in Persian, abstract in English)
Dadgar Y, Nazari R. the analysis of the demand function of import in Iranian economy the period, 1974-2007. Quarterly Journal of economics review. 2010; 7(1):1-22. (in Persian, abstract in English)
Goldstein M, Khan M.S. Large Versus Small Price Changes and the Demandfor Imports. I.M.F., Staff Papers. 1976; 23: 200-225. https://doi.org/10.2307/3866671
Houthakker H.S, Magee S.P. Income and price elasticities in world trade. The review of Economics and Statistics. 1969; 51(2): 111‑125. https://doi:10.2307/1926720
Hyuha T, William E, Kyomuhendo B. Determinants of import demand of rice in Uganda. International Journal of Applied and Pure Science and Agriculture (IJAPSA). 2018; 3(4):75-81.
Islamic Republic of Iran Customs Administration, 2018. (in Persian, abstract in English)
Jalaei A, Sadeghi A, Ami Bandeh Gharaei H. estimating the substitution elasticities between commodity import, labor for force and capital usage in Iran (using translog cost function). Journal of Economic Research. 2008; 43(82):53-68. (in Persian, abstract in English)
Katrakilidis C, Kyritsis I, Patsika V. The dynamic linkages between economic growth, environmental quality and health in Greece. Applied Economics Letters. 2016; 23(3), 217-221.
Khan M.S. Import and Export Demand in Developing Countries. IMF Staff Papers. 1974; 21:678-693. https://doi.org/10.2307/3866553
Lotfalipor M, Hoshmand M, Elami A, Bostan Y.Effects of the industrial sector economic growth on the quality of the environment in Iran (Application of the self-explanatory model with extensive pauses). Environmental Researches. 2017;8(16):103-114. (in Persian, abstract in English)
Mehrabian A, Pishdad Sh. Analysis of import demand function in Iran. The 5th International Virtual Conference. 2013. Islamic Azad University Central Tehran Branch. (in Persian, abstract in English)
Musvai shalmani sh, Shahnavazi A. Estimating demand function of wheat imports in Iran using the ARDL model. International Conference, Association for the Development and Promotion of Fundamental Sciences and Technologies; 2014, Tehran. (in Persian, abstract in English)
Pahlavani M, Dahmardeh N, Hosseini S. Estimating the export and import demand functions in Iran by using autoregressive distributed lag (ARDL) cointegration Approach. Qurterly Journal of Economics review.2007. 2007;4(3):101-120. (in Persian, abstract in English)
Pesaran MH, Shin Y, Smith R. Bounds testing approaches to the analysis of level relationships. Applied Econometrics. 2001; 16: 289 – 326. https://doi.org/10.1002/jae.616|
Sameti M, Jalali S, Sadeghi Z. Globalization effects on pattern of Iran import demand (1952-2003). Economic Research. 2004,4(12):1-16. (in Persian, abstract in English)
Shafeai S, Bostan Y, Fatahi Ardakani A, Jahanigarpur D, Erfani mooghdam R. Forecasting and surveying real exchange rate uncertainty on agricultural imports using artificial neural network approach. Agricultural Economics Research. 2018. (In print for 2020, in Persian, abstract in English)
Tashkini A, Basani AR. The estimation of import demand functions, The case of Iran (1959-2003). Journal of Trade Studies (IJTS). 2006; 10(40): 205-226.(in Persian, abstract in English)
Tehran Chamber of Commerce Industries Mines and Agriculture. (2018). http://en.tccim.ir/ (in Persian)
United States Department of Agriculture (USDA), 2017. https://www.usda.gov/
Journal of Sugar Beet
Volume 35, Issue 2
March 2020
Pages 207-216

Files

Share

How to cite

Statistics