Disaggregated import demand and expenditure components in Malaysia: an empirical analysis

This study aims to investigate Malaysian import demand behaviour for consumption, investment and intermediate goods covering the period 1968 to 1998. The determinants involved comprise various final expenditure components (consumption expenditure, expenditure on investment goods, and exports) and relative price. The study adopted cointegration and error correction modeling techniques for analysis. The major findings are as follows. First, the import of consumption, investment and intermediate goods, and its determinants are cointegrated. Second, different import components behave differently with determinants both in the long and short runs. Third, the explanatory variables do jointly Granger cause volume of imports at a disaggregated level. The findings documented in this study have a relevance for policy implications