Aggregate imports and expenditure components in the UK: an empirical analysis
This paper examines the long-run relationship between UK aggregate imports and the macroeconomic components of final expenditure, using the Johansen multivariate cointegration analysis. It is found that there are significant differences between the long-run elasticities of import demand with respect to the different components of final expenditure, over the period 1972 to 1990. An error correction model is proposed for short-run forecasting of UK aggregate imports. The short-run model appears to track the data well.