Long-Run Industry-Level Estimates of U.S. Armington Elasticities
USITC Working Paper No. 2000-09a
30 Pages Posted: 8 Jan 2001
Date Written: October 2000
Abstract
A key relationship for trade policy analysis is the degree of substitution between imported and domestic goods due to changes in the relative price of those two goods, commonly known as the Armington elasticity. We estimate Armington elasticities for 312 industries at the 4-digit SIC level over the period 1989 to 1995. Our estimation results offer the most comprehensive, disaggregated, and up-to-date set of Armington elasticities. We report long-run estimates when possible, and find that long-run estimates are on average twice as large as the short-run estimates. This is important since the long-run estimates are more appropriate for most trade policy analysis than the short-run estimates. Further, it is shown that statistically significant differences exist within most 3-digit SIC industries, which highlights the importance of estimation at a disaggregated level since policy changes are typically focused on narrow product definitions.
Keywords: Trade, Econometric and Statistical Methods
JEL Classification: F1, C1
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
How Confident Can We Be in Cge-Based Assessments of Free Trade Agreements?
By Thomas W. Hertel, David L. Hummels, ...
-
Internal Quota Allocation Schemes and the Costs of the Mfa
By Irene Trela and John Whalley
-
Economic Implications for Turkey of a Customs Union with the European Union
By Glenn W. Harrison, Thomas F. Rutherford, ...
-
By Glenn W. Harrison, Thomas F. Rutherford, ...
-
Trade Policy Options for Chile: A Quantitative Evaluation
By Glenn W. Harrison, Thomas F. Rutherford, ...
-
By David G. Tarr and Angelo Gurgel
-
How Interest Rates Changed Under Financial Liberalization - a Cross-Country Review
-
By Caesar B. Cororaton, John Cockburn, ...