Indonesia Export, Import, and Demand for Domestic Commodities under Economics Liberalisation

The aim of this research is to identify the behaviour of export, import and domestic commodities<br />demand in liberalization era both in the long run and the short run. This research<br />applies the Vector Error Correction Model, Johansen Cointegration Test, Impulse Response<br />Analysis and Granger Causality Test. The data range from 1993:01 to 2002:12. The result<br />shows that in the long run the cross-price elasticity of imported non agricultural goods with<br />respect to demand for domestically produced goods have lower magnitudes than own price<br />elasticity of domestically produced goods. The demand elasticity of import commodities is<br />elastic but that of domestic commodities is inelastic.<br />Keywords: Import, Export, Economic Liberalization, Vector Error Correction Mode