THE ADJUSTMENT OF CANADIAN IMPORT DEMAND TO CHANGES IN INCOME, PRICES, AND EXCHANGE-RATES

The paper provides estimates of the sensitivity of Canadian import demand to changes in income, prices, and exchange rates. The model specification allows for the consideration of long-run elasticities as well as the dynamics of short-run adjustment of imports to changes in these variables. The estimated long-run elasticities obtained are similar to those in previous studies. It is also shown that Canadian imports react quickly to changes in either foreign or domestic prices, but that the reaction to changes in exchange rates is much slower.