Trade Agreements and Trade Opportunities: A Flexible Approach for Modeling Australian Export and Import Elasticities |
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| Authors: | Kevin J. Fox Ulrich Kohli Alice Shiu |
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| Affiliation: | 1. School of Economics & CAER, University of New South Wales, Australia;2. University of Geneva, Switzerland;3. School of Accounting and Finance, Hong Kong Polytechnic University, Hong Kong;4. We thank Dayne Kelly and Lina Tsang for assistance with data collection, and gratefully acknowledge financial assistance from the Hong Kong Polytechnic University, the University of New South Wales, the Australian Research Council (DP0559469) and the Spanish Ministry of Education and Science and FEDER (Project MICINN ECO2008‐05908‐C02‐02). We also thank two referees and the associate editor whose insightful comments led to important improvements. |
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| Abstract: | Patterns of trade have changed enormously over the last 30 years, particularly due to the economic emergence of several Asian countries. With the increasing international tendency for bilateral preferential trade agreements, it is important for countries to be aware of trade substitution possibilities. This paper estimates import and export price elasticities for Australia and its major trading partners in Europe and Asia, 1958 to 2002, using a fully flexible version of the Symmetric Normalized Quadratic aggregator function. Imports and exports are disaggregated into six regions, covering 17 countries. Our results illuminate the (changing) substitution and complementarity patterns for Australian foreign trade, highlighting trading opportunities in the face of a changing international environment. |
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