We use time series techniques to avoid spurious regressions. We compare the performance of different specifications, including either domestic demand or income as the activity variable, with encompassing techniques. We test the relative price restriction in the short and long run. Then we compare the elasticities as estimated with the chosen specification. Our results suggest a long run relationship between imports, prices and activity variable for both countries.
Income seems to be a better explanatory variable.
Relative price restriction holds only in the long run not in the short run. Finally elasticities are similar.