The effect of change in exchange rate to intermediate imports of Thailand

Abstract

This thesis aims at studying the effect from change in exchange rate to the imports of intermediate products and capital goods for Thailand by using secondary data during 1964-2000. The intermediate products and capital goods are separated to 4 categories, namely intermediate products chiefly for consumer goods, intermediate imports chiefly for capital goods, capital goods and other imports. The regression results after improving the model by using the Cochrance-Orcutt procedure were as follow; For imtermediate products chiefly for consumer goods variables there were 2 from 7 equations that exchange rate had negative effect on these variables as expected, which are 3rd and 6th and 2 equations that exchange rate was inelastic to intermediate imports there were 2nd and 7th equations. In the second category, Intermediate prodducts chiefly for capital goods variables there were 2 from 4 equations that exchange rate has negative effect on these variables as expected which were 9th and 10th equations but exchange rate were unitary to intermediate imports in every equations. In the third category, capital goods variables there were 9 from 15 equations that exchange rate had negative effect on these variables as expected these were 12th 13th, 15th, 18th, 19th, 20th, 21st, 22nd and 24th equations but only 19th, 21st and 22nd equations which demand for intermediate imports were elastic, the others are unitary. In the last category, other imports variables there were 10 from 12 equations that exchange rate had negative effect on these variables as expected these were 27th, 28th, 29, 30th, 31st, 32nd, 35th, 36th, 37th and 38th equations. And demand for intermediate imports was elastic in almost every equation exclude in 32nd, 33rd, 34th and 38th equations, which are unitary. But in every equation GDP had positive effect on the import demand as expected implying that when GDP change, this will effect the intermediate products and capital goods in the positive way in every equation. It is concluded that the GDP had more consistent effect to the demand for intermediates import than exchange rate variable. Growth of the economy would have strong and consistent effect to import demand of Thailand while change in exchange rate had no proedictable effect.