An Empirical Analysis of Cambodia's Import Demand Function

Abstract

This empirical study examines an import demand function for Cambodia by employing time series data during 1993-2015. This study uses Autoregressive Distributed Lag (ARDL) model to investigate the impact of relative prices, foreign direct investment, final consumption expenditure, export volume, exchange rate and foreign exchange reserve on import demand in Cambodia for both long run and short run. The study finds that relative prices and exchange rate are negative effect on import demand in Cambodia for both long and short run, while export volume is positively effect on import demand. While, foreign direct investment, final consumption expenditure, and foreign exchange reserve are insignificant impact on import demand in Cambodia. The finding suggests that the Cambodian government should monitor domestic price.