Cyclical factors in import demand behavior: The Korean experience

The present paper employs detrending method with a structural break in analyzing the import demand behavior of Korea, All concerned variables are revealed to be trend stationary. Since the import liberalization policy in the early 1980s appears to be effective, we look at the effect of cyclical factors in determining cyclical import demand in the period of post-import liberalization. According to the estimation results, two things are noteworthy: First, exchange rate policies are invalid in changing Korean import, and, second, comparing the trade balance of Korea with that of United States, the latter is more likely to record deficits.