The impact of purchasing power parity on auto foreign trade |
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Authors: | Nurcan Metin Sudi Apak |
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Institution: | (1) Institute for Advanced Studies, Stumpergasse 56, 1060 Vienna, Austria |
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Abstract: | In this study, the validity of the assumption saying that the import and export are a function of prices as in the classical,
neo-classical approaches is studied within the framework of the import and export of automobile vehicles between 1997 and
2003 in Turkey and the EU countries which are automobile manufacturers. The price here is considered as the purchasing power
parity. The effect of the purchasing power parity on the automobile import and export is determined by using classical models
with constant coefficients, and fixed and random effects models with constant slope coefficients and a constant term differing
according to units and/or time. The models comprise balanced linear panel data models. The likelihood ratio test and F-test are used in the selection of fixed effects and classical models; and the Lagrange multiplier test is used in the selection
of random effects and classical models. As for the selection of fixed and random effects models, the Hausman test is used.
As a result of these tests, the fixed effects models covering both individual and time effects are selected as the most appropriate
import and export models. |
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Keywords: | |
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