A systems approach to the demand for imports and domestic output in the UK

Main points

• This paper is concerned with the allocation of totaI final expenditure between different categories of domestic output in the UK and imported goods. It is argued that the full complexity of these relationships can only be properIy captured within a framework of a demand system with the simultaneous estimation of a disaggregated model. The paper explains the theoretical relationship between the underlying structural model and the chosen specification which relates final expenditure to net output and total imports, and reports econometric estimates obtained from UK data from the period from the lates 1960s to the present day.