In this paper, we re-estimate the import and the export demand functions for Mauritius and South Africa using time series data. We use the bounds tests for cointegration and find evidence of a long-run relationship between import demand, income and prices for both countries. Our long run elasticities reveal that domestic income and relative prices have significant effects on the import demand for both countries, with income being the most important determinant. Furthermore, we find that while South Africa’s export demand is not responsive to relative prices or income; for Mauritius income is statistically significant.
Field of Research
140210 International Economics and International Finance
Socio Economic Objective
910399 International Trade not elsewhere classified