Abstract
This paper uses the relatively new procedures of cointegration and error-correction modeling to examine the import demand function of three developing economies. The empirical results suggest that the error-correction model performs well and that the poor results of previous studies are attributable to the inappropriate use of the Cochrane-Orcutt procedure and the complete absence of diagnostic testing, especially with respect to parameters stability, autocorrelation, and variable omission.
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Arize, A.C., Ndubizu, G. Cointegration, error correction representation and the import demand function with implications in International Finance and Accounting Research. Rev Quant Finan Acc 2, 359–376 (1992). https://doi.org/10.1007/BF00939017
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DOI: https://doi.org/10.1007/BF00939017