Saudi’s Export Demand Function: The ARDL Approach

Abstract

Saudi Arabia has been witnessing a rapid growth in exports more specifically since the inception of 21st century. The paper intends to estimate Saudi’s export demand function using bound test approach to cointegration developed by Pesaran et al (2001). The result shows that there is long run equilibrium relationship between demand for export, world income and real effective exchange rate. The elasticity of demand for Saudi’s export with respect to world income and real effective exchange rate (REER) has been found to elastic, both, in the short run as well in the long run. The export has been found to more elastic in the short run than in the long run with respect to both the variables.

Key Words: Export demand, price and income elasticity, bound test.

JEL Classification: F14