Empirical estimates for the Brazilian total imports equation using quarterly national accounts data (1996–2010)

Abstract

This paper presents econometric estimates for the Brazilian aggregate imports over the period 1996–2010. To the best of our knowledge, this is the first paper that uses the Brazilian quarterly national accounts with this goal in mind. Besides estimating a demand equation (canonical model), as it is usual in the literature, we also explore the co-movements among total imports, gross fixed capital formation and household consumption (alternative model). The results underscore the role played by domestic income, which is the main determinant of total imports. The limited domestic supply of capital goods makes the allocation of domestic income also relevant to the imports dynamics. It should be noted, however, that this specification needs a better theoretical grounding. Evidence of nonlinearities has been found by different estimation techniques. Unfortunately its precise characterization turns out to be difficult due to the diversity of the results obtained. The out-of-sample assessment (one-step-ahead forecast) shows a good performance of the long-run vectors of the alternative models in predicting aggregate imports, meanwhile the best performance is obtained by the error correction representations of the canonical model. We believe those differences emerge from the different speeds of adjustment toward the long-run solutions.