An Aggregate Import Demand Function for India: A Cointegration Analysis

This paper investigates the behaviour of Indian aggregate imports during the period 1971-1995. In
our empirical analysis of the aggregate import demand function for India, cointegration and error
correction modelling approaches have been used. In the aggregate import demand function for
India, import volume is found to be cointegrated with relative import price and real GDP. Our
econometric estimates of the import-demand function for India suggest that import-demand is
largely explained by real GDP, and is generally less sensitive to import price changes. Import
liberalisation is found to have had little impact on import demand.