Autonomous imports
Topic: Balance of Payments and Exchange Rates · NCERT: Class 12, Ch 6 "Open Economy Macroeconomics"
Meaning
Autonomous imports are imports that do not depend on the country's income. In the import function M = M̄ + mY, they are the fixed part M̄ (where M̄ > 0). Even at zero income, the country would still buy these goods from abroad. An autonomous rise in imports is a leakage from the circular flow, so it lowers equilibrium output. The effect is ΔY*/ΔM̄ = −1/(1 − c + m), where c is the marginal propensity to consume and m is the marginal propensity to import.
Example
In the NCERT function M = 60 + 0.06Y, autonomous imports are 60. Suppose c = 0.8 and m = 0.3. The open-economy multiplier is then 1/0.5 = 2. So an autonomous rise in imports of ₹100 cuts equilibrium output by ₹200.
Don't confuse with
- Induced imports (mY): this part of imports rises and falls with income. Autonomous imports stay the same whatever the income.
Related concepts
- Open economy
- Closed economy
- External sector
- Export
- Import
- Demand for domestic goods
- Net exports
- Marginal propensity to import