Modelling Import Penetration

Kenneth W. Clements, Long Hai Vo, Marc Jim Mariano

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)


Import penetration has grown substantially in Australia over the past two decades. This study examines import penetration using a consumer demand approach that distinguishes domestically and foreign-produced varieties. The approach avoids restrictive assumptions such as homotheticity and permits an array of hypothesis tests of a functional form. This study uses an innovative procedure to estimate the model with a relative short time series, which is important for countries with limited data. We show how consistent aggregation leads to a macro-level import demand equation that faithfully reflects the underlying micro-demands. Surprisingly, income growth is mainly responsible for the surge in imports and not for their low cost.
Original languageEnglish
Article number105590
JournalEconomic Modelling
Early online date29 Jun 2021
Publication statusPublished - Sept 2021


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