An Examination of the Merchandise Imports Demand Function for Egypt

Abstract

Merchandise imports in Egypt is growing steadily and very rapidly, at an average growth rate of 10.64 percent/year during 1970-2014. So, this study is very important to know the merchandise imports determinants in Egyptian economy. This study empirically estimates the critical parameters of merchandise import demand determinants for Egypt by using Ordinary Least Squares (OLS) approach and Error Correction model during the period (1970-2014).The empirical results confirm that, in both long run and short run, there is positive and significant relationship between the demand for merchandise imports and real gross domestic product, but there is a negative and significant relationship between the demand of merchandise imports and real effective exchange rate. On the other hand, in the long run, there are positive and significant relationships between the demand for merchandise imports and both of inflation and international reserves but insignificant relationships in the short run.