Adjustment and Stability in Import Demand of the Iranian Agricultural Sensitive and Critical Products

Aim of this study is to analysis adjustment process of sensitive and critical importing agricultural products as well as to determine factors affecting their import. Selected products are grains, soybean and sunflower oil, poultry, meat, sugar and soya bean which account for more than 80 percent of Iranian agricultural products import value in study horizon of 1981-2011. To get the objectives, cointegration and error correction model are applied. Factors affecting import includes import-domestic price ratio, tariff rate, domestic output, oil income excluded GDP and oil income. Based on Exploratory Data Analysis (EDA) some of the above variables are included in the import model. The findings show low sensitivity of the products import with respect to explanatory variables in both of short and long run. However, among the other, import-domestic price ratio may be regarded as a factor with the higher influence. Error correction model also reveals that import deviation of the products with respect to their long run equilibrium will be adjusted at most by two periods. The coefficients stability test also indicates the model stability over the selected period.