Abstract            Volume:4  Issue-5  Year-2016         Original Research Articles

Online ISSN : 2347 - 3215 Issues : 12 per year Publisher : Excellent Publishers Email : editorijcret@gmail.com

This study reexamines the behaviour of aggregate import demand function for COMESA using the Johansen Juselius multivariate cointegration approach and error correction mechanism on the annual data for the period 1970 to 2006. Empirical evidence show that aggregate imports, gross domestic product, unit value of imports, prices of domestically produced goods, foreign exchange reserves and the dummy variable to capture the effect of import liberalization  are cointegrated. There is a long run equilibrium relationship among variables and the stability tests indicate that the aggregate import demand function remains stable over the sample period and the estimated results are appropriate for policy implication. The estimation  of  an  error  correction mechanism  enables  the separation of the short-run and long-run  elements  of  this  relationship. Results show that aggregate import demand is largely explained by real GDP, foreign exchange   reserves, prices of domestically produced goods but less sensitive to import prices.

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