Aggregate Import Demand and Expenditure Components in Ghana

Abstract

The behaviour of Ghana’s imports during the period 1970-2002 was studied using disaggregated expenditure components of total national income. We used newly developed bounds testing approach to cointegration and estimated an error correction model to separate the short- and long-run elements of the import demand relationship. The study revealed inelastic import demand for all the expenditure components and relative price. In the long-run, investment and exports were the major determinant of movements in imports in Ghana. In the short run household and government consumption expenditures was the major determinant of import demand. Import demand was not very sensitive to price changes.