The Determinants of Aggregate Demand Function of SudanIbrahim AAA1* and Ahmed EM2
- *Corresponding Author:
- Ibrahim Ahmed AAA
Department of Economics
Faculty of Economics and Social Studies
Alneelain University, Khartoum, Sudan
E-mail: [email protected]
Received date: June 07, 2017; Accepted date: July 20, 2017; Published date: July 27, 2017
Citation: Ibrahim AAA, Ahmed EM (2017) The Determinants of Aggregate Demand Function of Sudan. Bus Eco J 8: 309. doi: 10.4172/2151-6219.1000309
Copyright: © 2017 Ibrahim AAA, et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
The main objective of this study is to estimate the determinants of the aggregate import demand function for Sudan during the period 1978 to 2014. The year 1978 was chosen because was the first year of devaluation as recommended by the IMF, and the year 2014 where the data were available. The study tests the stationary of individual series namely, domestic income, relative prices and exchange rate using the widely used the Augmented Dickey-Fuller (ADF) and Phillips-Peron (PP) statistics and Johansen co-integration techniques to estimate import demand function in the longrun. The estimated results indicate that there is long-run co-integration relation among the volume of imports, domestic income, relative prices and exchange rate. The results of this study suggest that GDP has greater effect on the quantity of import than the other determinants (price ratio and exchange rate).