Trade Agreements and Trade Opportunities: A Flexible Approach for Modeling Australian Export and Import Elasticities

18 Pages Posted: 19 Jul 2010

See all articles by Kevin J. Fox

Kevin J. Fox

UNSW Australia Business School, School of Economics

Ulrich Kohli

Swiss National Bank

Alice Shiu

Hong Kong Polytechnic University - Department of Business Studies

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.

Suggested Citation

Fox, Kevin J. and Kohli, Ulrich and Shiu, Alice, Trade Agreements and Trade Opportunities: A Flexible Approach for Modeling Australian Export and Import Elasticities. Review of International Economics, Vol. 18, No. 3, pp. 513-530, August 2010. Available at SSRN: https://ssrn.com/abstract=1640847 or http://dx.doi.org/10.1111/j.1467-9396.2010.00907.x

Kevin J. Fox (Contact Author)

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia
(02)9385-3320 (Phone)
(02)9313-6337 (Fax)

Ulrich Kohli

Swiss National Bank ( email )

Borsenstrasse 15
CH-8022 Zurich
Switzerland

Alice Shiu

Hong Kong Polytechnic University - Department of Business Studies ( email )

Hung Hom, Kowloon
Hong Kong

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