LIML estimation of import demand and export supply elasticities

I apply limited-information maximum likelihood (LIML) to estimate import demand and export supply elasticities for a range of eurozone countries. The results highlight inconsistencies in the parameters estimated by LIML relative to an estimator that is robust to heteroskedasticity. The nature of the structural equations reveals complications generated by the limiting behavior of the parameters that can be replicated in finite samples. The results of simulations underscore improvements in parameter estimates in a three-dimensional panel, suggesting that the problem of limiting behaviour can be overcome in larger dataset/panels.     

U.S. import and export elasticities: a panel data approach

This article describes the creation of a new dataset on sectoral-level import and export elasticities in the U.S. between the years 1978 and 2001. It proposes the use of panel data techniques as a means of generating import price indexes, and then using them to measure trade elasticities while instrumenting for the endogeneous variables. In particular, it provides a dataset listing trade elasticities for a broad range of sectors at the North American Industry Classification System 4-digit, and 6-digit and the Harmonized Tariff System 6-digit, and 10-digit levels of industry aggregation. These results are compared to previous estimates in the literature. The resulting estimates can be used in a wide-range of applications in empirical studies of international trade policy, particularly in analyzing the welfare effects of international trade.     

Some estimates of the price and income elasticities of import demand for three Caribbean countries

This paper provides estimates of the short-run and long-run price and income elasticities of import demand for three developing economics. The econometric evidence confirms that devaluation is an appropriate policy to correct for balance of payments disequilibrium in the Caribbean, and it supports the IMF stabilization approach.     

Input-output anatomy of changes in employment structure in Austria between 1964 and 1976

Zusammenfassung Zwischen 1964 und 1976 ist in Österreich die Zahl der Erwerbstätigen nur um 0,3% gestiegen. Die Beschäftigungsstruktur nach Wirtschaftsbereichen hat sich aber grundlegend verändert. Um festzustellen, woher die Impulse zu diesen Strukturverschiebungen kommen —aus dem Außenhandel, aus der heimischen Nachfrage oder aus dem ungleichmäßigen Produktivitätswachstum —, wurde ein auf der Grundlage der Input-Output-Analyse entwickeltes Verfahren verwendet. Datenbasis der Untersuchung waren die einzigen zwei verfügbaren österreichischen Input-Output-Tabellen für 1964 und 1976 (zu konstanten Preisen von 1976).Zwischen 1964 und 1976 hat die heimische Endnachfrage in Österreich um 65,6% zugenommen (zu konstanten Preisen von 1976, ohne Mehrwertsteuer, nach den Angaben in den Input-Output-Tabellen). Hätte es keine Strukturänderungen gegeben (d. h. bei einem gleichschrittigen Wachstum der Wirtschaft), würde dem ein hypothetischer Zuwachs der Erwerbstätigen um 2,223.900 Personen entsprechen. Steigende Arbeitsproduktivität verringerte gleichzeitig den Bedarf an Erwerbstätigen um 1,995.500 Personen. Die Differenz beider Zahlen beträgt 228.400 Personen, der tatsächliche Zuwachs der Erwerbstätigen betrug jedoch nur 9.700 Personen. Das bedeutet, daß die Strukturänderungen zwischen 1964 und 1976 produktivitätsfördernd (arbeitssparend) waren und eine hypothetische Einsparung von 218.700 Personen zur Folge hatten. Davon entfielen nach den Ergebnissen der Input-Output-Analyse 43.600 Personen auf den Außenhandel (d. h. Export und Import, die stärksten Effekte hatte die Verdrängung der heimischen Produktion durch Importe in der Endnachfrage, vorwiegend im privaten Konsum und in den Brutto-Anlageinvestitionen). Auf Änderungen der Struktur der heimischen Endnachfrage entfällt eine Verminderung der Zahl der Erwerbstätigen um 101.100 Personen, auf Änderungen im intermediären Bereich (die durch Technologieänderungen, Vertiefung der Arbeitsteilung und Änderungen in der Produktzusammensetzung innerhalb einzelner Bereiche verursacht wurden) ein Rückgang der Nachfrage nach Arbeitskräften von 73.900 Personen. Neben dem reinen Importsubstitutionseffekt im Außenhandel wurde die Nachfrage nach Arbeitskräften einerseits durch die Verschiebung zu Bereichen mit höherer Importquote (z. B. von Nahrungsmitteln zu Pkw), andererseits durch Abwanderung der Erwerbstätigen aus Bereichen mit niedriger Wertschöpfung je Erwerbstätigen (z. B. aus der Landwirtschaft oder aus der Textilindustrie) verursacht. Der Aufsatz gibt auch Auskunft über die Impulse zu den Änderungen der Zahl der Erwerbstätigen in einzelnen Wirtschaftsbereichen.

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The author wishes to render his thanks to G. Fink and to J. Richter for valuable comments, and also to F. Prager, who translated this study from the original German text. Any errors are the sole responsibility of the author.     

Conjectural variation elasticities and concentration

This paper shows that measures of seller concentration can be interpreted as weighted averages of conjectural variation elasticities. This interpretation allows an assessment of the appropriateness of a wide variety of concentration measures for price-cost margin studies.     

Estimating demand elasticities under rationing

Eliminating rationing in the United Kingdom following the Second World War was a concern for policy-makers because of potentially large fluctuations in post-war prices and the impact on unrationed goods. This study shows that in using virtual prices, elasticities can be estimated from a ‘free’ demand system consistent with observed consumer choices. Substitution estimates without accounting for rationing are misleading. In contrast, using virtual prices and estimating a ‘free’ market system yield results similar to those of the pre-war period. Results show that food rationing affected expenditure across unrationed goods. Rationing on other services had little effect on expenditure across unrationed goods.     

The measurement of income and price elasticities

In a complete system of disaggregated demand equations, the econometrician must limit himself to the measurement of a small number of parameters for each commodity. Since interest often focuses on the income and own-price elasticities for each good, it is natural to look for models which allow independent measurement of these while providing plausible assumptions about the less essential responses. This paper surveys a number of common theoretical specifications which purport to do this, and argues that these are unsatisfactory. The conclusions are supported by an empirical comparison on British data of the results of three models, one of which is new and is designed to remedy some of the deficiencies of standard practice.     

中国农业的投入产出分析

本文主要利用投入产出分析中的直接消耗系数、完全消耗系数、影响力系数、感应度系数、诱发系数等,结合中国1987、1992、1997、2002、2005年62个部门的投入产出表数据,对我国农业进行了初步分析,并得出了相应的结论与建议。     

Estimation of income elasticities from cross-section data

Using Johnson's decomposition technique, this paper demonstrates that the disappearance of the gap between female and male unemployment rates in the United States during the last decade results partly from a general hiring policy that is favourable to women workers. This conclusion holds for workers in five out of eight occupational subsamples considered. The sign and size of unexplained female - male unemployment rate differential estimated from 1969, 1977 and 1987 CPS data suggest that hiring discrimination against females in the US labour market has declined considerably during the last two decades. The study also supports the earlier finding that the growth of employment in government and in the female dominated service sector, and migration of workers from the South to other regions contribute significantly to the convergence of male and female unemployment rates in the 1980s.     

Import-export elasticities and exchange rate dynamics

This paper combines the older elasticities approach with the quantity theory of money. It is shown that the sole key factor in determining whether the exchange rate overshoots or undershoots its equilibrium value is the magnitude of import-export elasticities.     

Scale elasticities in Ghanaian cocoa production

The objective of this study is to develop a simultaneous equations model of profitability, concentration, advertising expenditures and research and development outlays. The data used in the estimation are subjected to regression diagnostics in an effort to determine the importance to the estimation results of a subset of the data that can have a disproportionate influence. The estimation results, especially for the advertising expenditures relationship and the research and development outlays equation, do change when a truncated data sample (based on the omission of the outliers) is used. This serves partly to explain why there is some disagreement in the literature on market structure and economic performance with regard to the impact of several economic factors.     

Long-run estimates of interfuel and interfactor elasticities

Meta-analyses of interfuel and capital-energy elasticities of substitution show that elasticity estimates are dependent on the type of data − time series, panel, or cross-section − and the estimators used. Econometric theory suggests that the between estimator might generate the best estimates of long-run elasticities but no existing estimates of elasticities of substitution have used it. Alternatively, Chirinko et al. argued in favor of estimating long-run elasticities of substitution using a long-run difference estimator. We provide estimates of China’s interfuel and interfactor elasticities of substitution using the between and long-run difference estimators. To address potential omitted variables bias, we add province level inefficiency and national technological change terms to our regression model. The results show that demand for coal and electricity in China is very inelastic, while demand for diesel and gasoline is elastic. With the exception of gasoline and diesel, there are limited substitution possibilities among the fuels. Substitution possibilities are greater between energy and labor than between energy and capital. The results are quite different to some previous studies for China but coincide well with the patterns found in meta-analyses for long-run estimates of elasticities of substitution.     

Demand elasticities for international message telephone service

Using a point-to-point model of toll demand, this paper provides estimates of own-price demand elasticities for international message telephone service. The study improves on previous studies by using more recent data and endogenizing price. Consistent with earlier studies, the demand for IMTS is found to be price inelastic, about??0.28 on average, in the short-run and near unitary elastic,??1.04 on average, in the long run. Both the level and the elasticity of demand are found to be positively related to the size of the telephone network. The own-price elasticity of demand for a select group of countries is provided.     

A note on locally constant income elasticities

A simple proof of Willig's theorem that all non-unitary income elasticitiesthat are constant must be equal to one another is given. It is also shown that multiplicatively separable demand implies locally constant income elasticity.     

Import price elasticities: reconsidering the evidence

Recent economic geography and trade empirical studies based on monopolistic competition suggest high levels of trade price elasticities (between 3 and 11). However, price elasticity estimations in trade equations using unit values as price proxies usually lead to lower values of around unity. We show that those inconclusive results may be due to some misspecification in these equations as well as measurement errors in prices. When suitable instrumental variables are used, within a panel of industrialized countries, we obtain high price elasticities, the majority ranging from 1 to 13. The highest estimates correspond to industries producing homogeneous goods. JEL classification: C2, C3 and F1.
Les élasticités prix des importations : un nouveau coup d'oeil aux résultats. Plusieurs études empiriques récentes fondées sur des modèles de concurrence monopolistique exhibent des élasticités prix estimées des échanges élevées (entre 3 et 11). Or, la plupart des élasticités prix estimées dans la littérature approchant les prix par des valeur unitaires sont plus faibles, de l'ordre de 1. Nous montrons que ces résultats non concluants pourraient provenir d'une mauvaise spécification des équations d'échanges ou d'erreurs de mesure sur les prix. Quand ceux-ci sont correctement instrumentés, sur un panel de pays industrialisés, nous obtenons des élasticités prix élevées (de 1 à 13). Les plus fortes correspondent aux secteurs produisant des biens homogènes.     

Disparities in income elasticities by ethnic origin

This paper uses expenditure survey data to analyse disparities in income elasticities of demand by ethnic origin. Engel curve estimates indicate that the food elasticity varies with ethnic origin, while the others are quite similar. With data on five food commodities, the income elasticities display considerable disparities.     

The double EMG distribution and trade elasticities

Using Brazilian export data that, unlike many trade data sets, have a full record of small export sales, this paper reconsiders trade elasticities and the welfare gains from trade. Using the Brazilian data, this paper provides novel evidence on the properties of the distributions of log‐export sales and shows that the double exponentially modified Gaussian (EMG) distribution parsimoniously captures these properties. Using the double EMG distribution in a standard monopolistic competition model of trade, this paper demonstrates that data truncation, which is prevalent in many data sets, leads to an upward bias in measuring the partial elasticity of trade with respect to variable trade costs. This bias subsequently leads to the underestimation of the gains from trade by 1% to 9% depending on the extent of data truncation, a range that is commensurate with typical economic growth and large booms.     

Bilateral and regional trade elasticities of the EU

The traditional way of assessing the impact of currency depreciation and income on the trade balance has been to estimate the elasticity of trade volume to relative prices and income. The previous studies examine the problems associated with using aggregate data. The recent studies rely on bilateral data, yet another problem is that data for export and import prices are not available. Thus, this study proposes an alternative way of assessing the impact of currency depreciation by using the real exchange rate and the impact of income on bilateral trade. The models are applied between the EU and its major trading partners. Furthermore, the analysis includes the six major trading regions along side the eight major trading countries for 1980–2007, on the quarterly basis. This article uses the autoregressive distributive lag (ARDL) approach advocated by Pesaran and Pesaran (1997). Our results indicate a higher importance of income compared to the real exchange rate in defined bilateral export and import demand functions. In addition, the applied CUSUM and CUSUMSQ stability tests confirm the stability of estimated coefficients in most cases.