The Estimation of Marquez’s Bilateral Import Function for Iran and Turkey by Using ARDL

اقتصاد پولی مالی

Article 10, Volume 21, Issue 8, January 2015, Pages 232-258   

Document Type: پژوهشی

DOI: 10.22067/pm.v21i8.45872

Author

Mostafa Karimzadeh^*

Abstract

Abstract
The bilaterale trade flows has an important role in economic literature specially in international literature. Economic integration in different forms such as free trade areas, customs unions, common markets and economic unions indicates this important role. Considering Turkey as one of the main trade partner of Iran, this paper intends to modeling bilateral trade flows between these countries.
We applied Marquez’s(1990) bilateral import function. According to Marquez model these varibles are determinantes of bilateral imports: gross domestic product, wholesale price index, forign export price index and exchange rate. We used Autoregressive Distributed Lags (ARDL) approach to estimate of bilateral import function between Iran and Turkey for the period (1981-2010).
The finding results verified an equilibrium long run bilateral import relation between two countries. According to our econometric estimations results for both Iran and Turkey, gross domestic product and wholesale price index have positive and significant affect on bilateral import. Whereas the influnce of forign export price index and exchange rate are significantly negative.

Keywords

Bilateral import function; Marquez model; Cointegration vector; Turkey

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