China's Changing Trade Elasticities

21 Pages Posted: 28 May 2008

See all articles by Jahangir Aziz

Jahangir Aziz

International Monetary Fund (IMF) - Asia and Pacific Department

Xiangming Li

International Monetary Fund (IMF)

Multiple version iconThere are 2 versions of this paper

Abstract

China's sectoral trade composition, product quality mix, and the import content of processing exports have all changed substantially during the past decade. This has rendered trade elasticities estimated using aggregate data highly unstable, with more recent data pointing to significantly higher demand and price elasticities. Sectoral differences in these parameters are also very wide. All this suggests greater caution should be exercised when using historical data to simulate the response of China's economy to external shocks and exchange rate changes. Analyses based on models with estimated coefficients largely representative of China in the 1980s and 1990s are likely to turn out to be wrong, perhaps even dramatically.

Keywords: elasticity, exchange rate, trade, trade balance

JEL Classification: F40, F30

Suggested Citation

Aziz, Jahangir and Li, Xiangming, China's Changing Trade Elasticities. China & World Economy, Vol. 16, No. 3, pp. 1-21, May-June 2008, Available at SSRN: https://ssrn.com/abstract=1138046 or http://dx.doi.org/10.1111/j.1749-124X.2008.00111.x

Jahangir Aziz (Contact Author)

International Monetary Fund (IMF) - Asia and Pacific Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Xiangming Li

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
2
Abstract Views
466
PlumX Metrics