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Most of the available empirical studies about specification of import demand
function are concerned with two kinds of specification: traditional and foreign
exchange constraint specification. In recent years, with the improvement in new
econometrics approaches and considerable progress of co-integration tests for
investigating the long-run relationship among understudy variables, most of the
empirical studies about import demand function of developing countries have put
aside the foreign exchange constraint specification, explored the traditional
specification of import demand function and accepted it.
This study intends to reassess the existence of a long-run relationship among the
constituent variables of the traditional of Iran's import demand function by
applying. a new approach called" Bounds Testing Approach" (Pesaran; shin &smith
200 I). The results of this study indicate that the value of demanded import, relative
import prices and real domestic income of Iran throughout 1959-2000 are co
integrated. Also the long-run estimated income and price elasticities whit ARDL
approach are I. 595 and - I. 44 respectively.