Abstract
The paper re-estimates the traditional aggregate demand function for Pakistan by employing Bounds test (ARDL) on the annual data for the period of 1972 to 2006. The study examines the long-run relationship among the import demand, real income, and relative price. The estimated results of the Bounds test (Pesaran at al. 2001) corroborate the existence of co-integration relationship among the relevant variables over the sample period. Stability tests demonstrate that import demand function is stable. Overall results exhibit that import demand function is even and suitable for the policy implications.
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