Template-Type: ReDIF-Article 1.0
Author-Name: Tuck Cheong Tang
Author-Workplace-Name: Department of Economics, Faculty of Economics and Administration, University of Malaya, 50603 Kuala Lumpur, Malaysia
Author-Email: tangtuckcheong@um.edu.my
Title: Financial Sector and Aggregate Import Demand: A General Equilibrium Perspective with Japan Data
Abstract: This study explores the role of financial sector on import demand behaviour (the real sector) from general equilibrium perspective, which is based on the portfolio balance approach to capture financial market. Japan’s data support partially this hypothesis given noncointegration finding, while foreign interest rate is significant i.e. reduces Japan’s imports.
Growth in foreign income is the most influential factor, and domestic economic growth both make more imports. However, the relative price of domestic goods, and domestic interest rate are insignificant. Japan’s monetary policy (interest rate) is inappropriate in altering the behaviour of imports in Japan, but fiscal policy that influences Japan’s economic growth.
Keywords: aggregate import demand, financial sector, general equilibrium perspective, Japan, portfolio balance approach
Pages: 45-64
Volume: 14
Issue: 2
Year: 2018
File-URL: http://web.usm.my/journal/aamjaf/aamjaf14022018/aamjaf14022018_3.pdf
File-Format: Application/pdf
Handle: RePEc:usm:journl:aamjaf01402_45-64