International Journal of Social Science & Economic Research
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Title:
MERCHANDISE TRADE DEFICIT AND IMPORT SUBSTITUTION FOR NEPAL

Authors:
Kshitiz poudel

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Kshitiz poudel
Collage of Economic and Management, Nanjing University of Aeronautics and Astronautics, China

MLA 8
poudel, Kshitiz. "MERCHANDISE TRADE DEFICIT AND IMPORT SUBSTITUTION FOR NEPAL." Int. j. of Social Science and Economic Research, vol. 5, no. 7, July 2020, pp. 1797-1822, ijsser.org/more2020.php?id=124. Accessed July 2020.
APA 6
poudel, K. (2020, July). MERCHANDISE TRADE DEFICIT AND IMPORT SUBSTITUTION FOR NEPAL. Int. j. of Social Science and Economic Research, 5(7), 1797-1822. Retrieved from ijsser.org/more2020.php?id=124
Chicago
poudel, Kshitiz. "MERCHANDISE TRADE DEFICIT AND IMPORT SUBSTITUTION FOR NEPAL." Int. j. of Social Science and Economic Research 5, no. 7 (July 2020), 1797-1822. Accessed July, 2020. ijsser.org/more2020.php?id=124.

References
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Abstract:
This study investigates Nepal disaggregate import function for three categories, FOOD, FUEL (food and live animal, mineral fuel and lubricant) and MACHINERY capital goods (machinery and transport equipment) from 1974 to 2018. In this work, we will Use the cointegration analysis and Vector auto regression model (VAR). The main aim of this paper is to find out whether it is possible to substitute these imports (food and live animal, mineral fuel and lubricant, machinery and transport equipment) with domestic production. Using real exchange rate and real gross domestic product as explanatory variables. The empirical result show that change in GDP cause major change to machinery and food imports while the real exchange rate is statistically insignificant in determining imports of food, machinery and fuel, implying that exchange rate policies would be ineffective in regulating imports in Nepal. Therefore, Nepal has to be careful when applying certain policies during implementation of development plans. That is to say, policies have to favor those industries that produce commodities that can in turn compete locally with imports.

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